Musk’s SpaceX in talks to borrow US$40 billion to buy Nvidia chips

[LOS ANGELES] Elon Musk’s SpaceX is in talks with banks and investors to raise US$40 billion of debt to buy chips from Nvidia, people familiar with the matter said, underscoring the insatiable demand among artificial intelligence developers for more computing power.

Pacific Investment Management is one of the investment managers looking at the deal, said the people, who spoke on condition of anonymity as the talks are private.

SpaceX’s fundraising discussions are in an early stage and could end without a deal being completed, they said.

Musk’s AI, satellite and rocket conglomerate is seeking to raise about US$10 billion in bank loans and US$30 billion in investment-grade debt to pay for the chips, the Financial Times reported earlier, citing unnamed sources familiar with the matter.

Apollo Global Management is leading the financing, in a deal that is expected to close in 2027, the newspaper said.

AI infrastructure spending

Tech companies and AI model developers are investing and borrowing hundreds of billions of US dollars to build and lease giant data centres full of chips to power AI systems.

The worldwide expansion of computing capacity has sent the cost of everything from land to chips and power generation equipment soaring, touching off a series of massive financing deals.

Nvidia, SpaceX and Apollo did not immediately respond to requests for comment.

SpaceX shares erased gains in postmarket trading following the report, falling as much as 1.8 per cent in New York, while Nvidia’s stock rose as much as 0.6 per cent.

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In September, Musk said Colossus 2, an AI computing cluster built by his xAI business, may more than double its current Nvidia chip count by end-2026.

It was the most detailed timetable that the billionaire has given yet for expansion plans for the Memphis-area cluster.

Colossus 2 now has 110,000 Nvidia GB200 chips and 440,000 GB300s, Musk said in a post on X.

A further 220,000 GB300s are due to be operational next week, with another 220,000 expected in November, he said.

An additional 220,000 may come online late December “if we get lucky”, he said.

Musk’s xAI has recruited multiple Wall Street firms to test its Grok chatbot, including Apollo and Morgan Stanley.

Apollo was among the US investment giants that Nvidia tapped for a high-profile partnership in August to source US$500 billion in financing for AI infrastructure.

The coalition – which also includes Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs Group and KKR – said at the time that they would “create dedicated pools of capital at significant scale at attractive rates for Nvidia customers”.

Executives indicated that it will focus on debt financing to provide access to compute for Nvidia’s largest customers and signalled that there were already many deals in the works that would qualify towards this commitment. BLOOMBERG