Elon Musk’s SpaceX wants to borrow $40 billion for Nvidia chips, and its bonds just hit a record for risk

American trillionaire Elon Musk’s SpaceX is working on a $40 billion debt raise to buy Nvidia artificial intelligence chips, a financing that would rank among the largest ever for the AI buildout and that sent the company’s bonds to their weakest level since its June listing.

The discussions, reported by Bloomberg and the Financial Times on Wednesday, involve banks and asset managers and are at an early stage; they could end without a deal, Bloomberg said. The FT reported the structure as roughly $10 billion of bank loans and $30 billion of investment-grade bonds, with Apollo Global Management expected to lead placement across a wide investor base and closing targeted for 2027. SpaceX and Nvidia did not comment.

Credit markets responded first. Five-year credit default swaps on SpaceX debt rose as much as 16.7 basis points to about 197.6 basis points, a record for the company, according to ICE Data Services, and its bonds weakened in secondary trading. SpaceX placed a $25 billion inaugural investment-grade bond earlier this year to fund AI compute; a further $40 billion would more than double its borrowing in under 12 months.

“This is unprecedented debt supply with no real ending in sight,” Sal Naro, chief investment officer at Coherence Credit Strategies, told Bloomberg of the AI sector as a whole. “This is larger than the railroads because this is global, all at once.”

The equity followed. SpaceX shares were down about 2% at $168.86 by late morning in New York, and Tesla fell about 1.5%. Forbes’ real-time list put Musk’s net worth at $1.03 trillion, down $21 billion or 2% on the day, still first in the world by a margin of more than $650 billion over Jeff Bezos at $374 billion.

The fall came two days after a Monday rally in both stocks had added more than $30 billion and returned him to trillionaire status, which he first reached around the SpaceX IPO and has since drifted in and out of.

The borrowing fits the strategy SpaceX has been describing since it absorbed xAI, now being renamed SpaceXSI. Its second-quarter capital spending was $18.4 billion, of which $15.8 billion went to AI compute, according to Baron Capital, and the company has set out plans for orbital data centers under the StarMind program that would require vast quantities of hardware launched on Starship, which reached orbit for the first time last week.

The chips come first, and they are not cheap: Nvidia’s latest accelerators sell for tens of thousands of dollars each, and a $40 billion order would be one of the largest single purchases the chipmaker has ever taken.

It also arrives in a month when the market has started counting. Goldman Sachs’ estimate that the hyperscalers need $300 billion a year in AI revenue to break even knocked $20 billion off Mark Zuckerberg’s fortune in two days; Larry Ellison’s Oracle, with $160 billion of debt, has been cut to the lowest investment-grade rating; and bond investors are now talking about “total Larry Ellison risk” across Oracle and Paramount.

SpaceX, which trades at roughly $2 trillion on revenue of about $19 billion last year, is asking lenders for $40 billion on a thesis that Starlink and orbital compute will eventually justify the multiple.

Musk’s fortune is a function of that thesis. He owns about 39% of SpaceX and controls 84% of the votes, plus roughly 11% of Tesla. A 2% move in SpaceX costs him $20 billion; a repricing of the AI story would cost him a great deal more. Wednesday’s record in the credit default swaps is the market’s first note that the question is now open.