Elon Musk said SpaceX has secured $40 billion in debt financing to buy AI chips, and warned that neocloud providers could fail.
Elon Musk, Tesla Inc.'s chief executive officer, said SpaceX has completed a major debt financing deal to secure artificial intelligence chips.
Bloomberg reported on October 25 that Musk wrote on X that SpaceX had finalized a $40 billion debt deal to buy Nvidia Corp. graphics processing units, or GPUs. It was not immediately clear whether investors had agreed on the final financing terms or whether the transaction had fully closed.
Musk emphasized that SpaceX carries an investment-grade credit rating and generates stable revenue from its Starlink satellite internet service and rocket launch business. That, he wrote, sets the company apart from other AI infrastructure players because it has independent sources of revenue beyond data centers.
He added that financing conditions have worsened sharply for neocloud companies that provide AI computing infrastructure. In recent weeks, companies with little revenue outside AI data centers have been effectively shut out of the bond market, Musk wrote, predicting that more than 200 neocloud companies will go through large-scale failures and consolidation.
SpaceX, however, has not been entirely immune to concerns over AI infrastructure investment. Financial institutions led by Goldman Sachs Group Inc. had discussed a $40 billion off-balance-sheet financing structure with investors including Apollo Global Management Inc., but volatility in the neocloud market reportedly made it difficult to finalize the funding terms.
The deal comes as SpaceX's AI business gains momentum. Its AI division posted its first profit in the third quarter and has been expanding revenue by selling computing capacity from its Memphis data center to outside AI labs and large technology companies.
Brett Johnson, SpaceX's chief financial officer, recently raised the possibility of additional borrowing on an earnings call. He said the company was confident it could raise capital prudently while maintaining its investment-grade credit rating.