Apollo, banks in talks to finance SpaceX's $40B Nvidia GPU purchase

Two weeks after its record-breaking IPO in mid-June, SpaceX raised $25 billion in bonds at different durations. CNBC reported at the time that the bond sale saw very high demand, highlighting strong interest from fixed-income investors.

Since then, AI-related bonds have sold off and credit spreads have widened. The $40 billion debt deal will likely use GPUs as collateral, and Apollo is said to be playing a leading role in facilitating the financing, the person said. Apollo declined to comment. Nvidia did not immediately respond to a request for comment.

The market is still operating under the expectation that GPUs hold their value for about seven years, according to a person in the credit industry who asked not to be named. Computing power is scarce, and the shortage is not expected to abate anytime soon, which supports the value of high-performing GPUs.

The Financial Times was first to report on the financing talks. While a bond deal of this size is notable, it follows a series of bond issuances from Meta, Amazon and Google as the cost to fund the AI buildout gets more expensive.

The sources also told CNBC that more debt sales are expected, and fixed-income investors are demanding a higher yield to service the debt, a sign that participants are becoming more selective about their AI exposure.

Editor's Summary Apollo Capital Management and banks are in talks with SpaceX to finance a $40 billion purchase of Nvidia GPUs, with the deal expected to lean on investment-grade debt and potentially use the chips as collateral. The talks follow SpaceX's $25 billion bond sale after its June IPO and come as AI-related bonds have sold off and credit spreads have widened. The financing would add to a wave of debt issuance by major technology companies funding AI infrastructure if it is completed.