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Musk said SpaceX has raised US$40 billion in off-balance sheet financing to buy Nvidia chips, and said the company has diversified revenue support; However, the market craze for AI infrastructure has waned, and financing pricing and terms are still a concern.
musk express,spacex It has completed a $40 billion loan transaction to buy the chips needed to develop AI. However, he did not explain the specific circumstances of the so-called “termination”. It is also not clear whether investors have agreed on financing pricing.
Musk posted on Twitter on Sunday that SpaceX relied on its investment-grade credit rating and revenues from its Starlink satellite business and rocket launches to finance off-balance sheet financing for the purchase of Nvidia graphics processors (GPUs). He emphasized that SpaceX’s business is diverse and that it is trying to differentiate itself from new cloud companies that sell high-end computing power to technology companies. Such companies have come under scrutiny in the last two weeks due to heavy borrowings and demand outlook.
Musk said: “Over the past few weeks, any company without significant revenue outside of AI data centers has been virtually unable to obtain funding from the debt market.” “More than 200 new cloud companies will be eliminated and consolidated like guppies. Some will survive, but not many.” He later called it “pointless” and said that SpaceX would not acquire any new cloud companies.
SpaceX hasn’t been able to completely avoid growing market skepticism about an AI infrastructure boom. Bloomberg reported on Friday that final pricing negotiations for a $40 billion off-balance sheet chip financing were disrupted due to recent market turmoil caused by new cloud players.
A banking group led by Goldman Sachs was previously negotiating a financing structure with investors led by Apollo Global Management, and it was to be managed by Apollo-backed Atlas SP, people familiar with the matter said. PIMCO has also evaluated the partnership. The debt was originally expected to be issued through a private placement of bonds complying with US Rule 144A rules.
SpaceX hopes to use this financing structure to avoid a repeat of the financing results of Musk’s AI startup XAI last year. Initially, one company planned to raise up to $20 billion through a sale and leaseback transaction with Valor Equity Partners and keep the associated debt off the balance sheet. However, SpaceX’s latest financial report shows that this transaction does not meet the accounting recognition conditions for a sale and leaseback, and SpaceX will ultimately have to include approximately US$13 billion of debt on its books.
SpaceX’s third-quarter financial report was strong, and its AI business made a profit for the first time, which later fueled this financing. The business is expanding to sell the computing power of the data center in Memphis to outside AI developers and hyperscale data center companies to increase revenue.
SpaceX Chief Financial Officer Brett Johnson said on the SpaceX earnings conference call that the company is in talks with financial institutions for further borrowing. “We are confident that we can move forward with these projects in a controlled manner and continue to maintain the investment-grade rating in the process,” he said of the investment-grade credit rating.
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Musk said this US$40 billion debt transaction was primarily to purchase Nvidia GPUs needed for AI development, and was handled through off-balance sheet financing to avoid directly increasing the debt pressure on the company’s books.
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He noted that SpaceX has an investment-grade credit rating and has multiple revenue sources such as Starlink satellites and rocket launches. Unlike many new cloud companies, which rely heavily on AI data center needs, debt market funds are easier to obtain.
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The report pointed out that the final pricing of the financing and whether investors agree is still unclear, and the recent market turmoil caused by new cloud companies may interfere with conditions; SpaceX does not want to repeat the situation where the XAI transaction was forced to recognize a large amount of debt.
