Musk Says SpaceX Closed $40 Billion Debt Deal for AI Chips as Reports Say Pricing Talks Continue

Elon Musk said Sunday that SpaceX had closed $40 billion in debt financing to buy graphics processing units, in a post on X that pointed to the cost of building computing capacity for artificial intelligence. He credited the company’s investment-grade rating and revenue from its Starlink satellite internet and launch businesses for keeping its access to debt markets open.

“This is primarily callable debt for GPU purchases that will arrive in Q1 and Q2. Not a major factor this quarter,” Musk wrote. Reuters reported that it was not immediately clear from his post what he meant by the deal being “closed,” or whether investors had agreed to pricing.

Pricing talks still open, Bloomberg reports

People familiar with the talks told Bloomberg News that pricing discussions were still going on as of late Sunday in New York and the deal had not priced. The debt is being structured as private bonds issued by an off-balance-sheet entity, Bloomberg reported, with bankers led by Goldman Sachs discussing the structure with investors led by Apollo Global Management.

For the fourth quarter, the company expects $35 billion to $40 billion in capital spending, according to Chief Financial Officer Bret Johnsen. In the third quarter, SpaceX revenue rose 161 percent from a year earlier to $14.58 billion, while revenue from its AI unit rose almost tenfold to $7.56 billion, Reuters reported.

Reuters reported earlier this month that SpaceX was in talks with banks and asset managers to raise $40 billion to buy Nvidia artificial intelligence chips. The company’s chip-making joint venture with Tesla in Austin, Terafab, is expected to produce its first test chip around May or June of next year and reach volume production by the third quarter of 2028.

A warning for smaller cloud firms

Musk said debt markets had “almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers.” He predicted that more than 200 smaller cloud firms that sell computing power to technology companies, known as neoclouds, would face heavy consolidation and failures, and said SpaceX would not buy any of them, calling it “pointless.”

Neoclouds such as Nebius and CoreWeave focus mostly on technology customers, unlike larger cloud firms that serve a broad range of industries. Investors have begun betting against neocloud and data center companies after worries about debt-funded AI spending touched off a selloff.

Bloomberg reported that the price of SpaceX’s own debt had fallen in recent weeks and that credit-default swaps tied to the company, used to insure against losses on its debt, rose last week to a record 266 basis points at Friday’s close, a level more common for a borrower rated below investment grade.

SpaceX is rated investment grade by the three largest credit graders, Bloomberg reported. The debt raise follows a third quarter in which the company’s AI unit turned a profit for the first time, selling computing power from its Memphis data centers to outside AI labs and larger cloud firms.

Reporting based on coverage by Reuters and Bloomberg.