SpaceX is engaging with Apollo Capital Management and various banking institutions to structure financing for a massive $40 billion acquisition of Nvidia graphics processing units (GPUs). According to a person familiar with the discussions, who spoke on condition of anonymity, the deal highlights the aerospace company’s aggressive expansion into artificial intelligence infrastructure.
The financing is expected to depend primarily on the investment-grade debt market. This move comes just four months after SpaceX issued a record-breaking $25 billion in bonds following its initial public offering in mid-June. At that time, the company reported overwhelming demand from fixed-income investors, although the broader AI-related bond market has since experienced selling pressure and widened credit spreads.
Under the proposed arrangement, the GPUs would likely serve as collateral for the debt, with Apollo Capital Management taking a lead role in facilitating the transaction. Apollo declined to comment, and Nvidia did not immediately respond to requests for commentary.
Market participants continue to view high-performance GPUs as stable assets, with industry sources suggesting they maintain value for approximately seven years. The scarcity of computing power, which is not anticipated to ease in the near term, underpins this optimism. The Financial Times was the first to report on the ongoing financing negotiations.
So SpaceX is essentially buying server farms now? At least they won’t have to worry about rocket failures as much.
The scarcity of computing power is real. If AI demand doesn’t slow down, this could be the smartest buy of the decade.
Just wait for the bond market volatility to bite. Investment-grade financing for hardware assets feels risky right now.
SpaceX is already drowning in debt after that $25B bond issuance last June. This leverage sounds dangerously aggressive to me.
$40 billion for GPUs is an insane bet. I wonder if the collateral value really holds up over seven years like they claim.