SpaceX is raising $40 billion in debt to fund NVIDIA chips for its Colossus AI data center.
SpaceX is in discussions to raise as much as $40 billion in debt to finance the purchase of Nvidia AI chips for its expanding artificial intelligence infrastructure. The proposed package would combine $10 billion in bank loans with $30 billion in investment-grade bonds, with Apollo Global Management leading the financing discussions and Pimco among the potential lenders. The chips would support SpaceX's Colossus data centres, which power AI operations and Grok models, and are tied to compute-leasing arrangements with companies including Anthropic and Google.
The scale of the proposed borrowing stands out in a market where AI infrastructure is increasingly financed through debt. SpaceX's structure would provide access to $40 billion without relying entirely on traditional bank financing—a significant departure from conventional capital-raising approaches.
Nvidia's position in this arrangement adds complexity. As SpaceX's exclusive chip supplier, Nvidia holds approximately $21 billion in SpaceX stock through its investment in xAI, creating what analysts describe as a circular flow of money: Nvidia benefits when customers secure financing to purchase its chips, while those customers assume the debt required to fund their AI infrastructure.
SpaceX already carries roughly $65 billion in debt and faces projected capital expenditure near $65 billion for the year alongside negative free cash flow. Adding another $40 billion in borrowing would put substantial pressure on the company's balance sheet. Notably, some of SpaceX's long-term bonds trade at spreads resembling those of junk-rated debt despite the company's investment-grade ratings, suggesting investors closely scrutinise the risks surrounding its rapid expansion.
A critical question for lenders is whether the computing capacity financed through this deal will remain fully utilised. If demand for SpaceX's AI infrastructure and leasing arrangements with companies like Google and Anthropic remains strong, the financing could demonstrate that large-scale AI infrastructure projects can attract substantial debt capital. Conversely, AI chips lose value as newer hardware generations arrive, creating potential mismatches between long-term debt obligations and asset value. A decline in demand for leased computing capacity could compound this pressure.
Market reaction has differed sharply: Nvidia shares moved slightly higher, reflecting positive sentiment toward potential chip demand, while SpaceX shares declined, reflecting investor concerns about the additional leverage. The proposed financing ultimately represents a significant test for debt-funded AI infrastructure. If SpaceX maintains high facility utilisation and generates sufficient contracted revenue to service the borrowing, the deal could encourage similar debt-financed AI investments across the industry. If utilisation falls or chip values decline sharply, lenders and investors could face markedly different outcomes.