American billionaire Elon Musk's SpaceX borrows $40 billion to buy AI chips

American billionaire Elon Musk said SpaceX has closed $40 billion of debt financing to buy artificial intelligence chips, one of the largest borrowings tied to the AI building boom and a sign of how much money his rocket and satellite company is pouring into computing power.

Musk, SpaceX's chief executive and its largest shareholder, announced the deal in a post on X on Sunday. He said the money will mainly pay for graphics processing units, the chips used to train and run AI models, that are due to arrive in the first and second quarters of 2027. He said most of the debt can be repaid early and that it will have little effect on SpaceX's results for the current quarter.

Musk did not name the lenders or give an interest rate. Earlier this month, people familiar with the talks said the package would be split into about $10 billion of bank loans and $30 billion of investment-grade debt, with Apollo Global Management expected to lead it and place the debt with investors. SpaceX was also in talks with bond manager PIMCO. The chips are expected to come from Nvidia, which Musk has said will supply all the hardware for SpaceX's data centers.

Musk warns smaller AI cloud firms

Musk used the announcement to warn that lenders are pulling back from the AI industry. He said SpaceX could raise the money because it holds an investment-grade credit profile and earns large revenue outside data centers, mainly from its Starlink satellite internet service and its rocket launch business.

He said debt markets have almost entirely shut off access to money for companies without substantial revenue. Musk predicted that more than 200 so-called neoclouds, companies that rent out GPU computing capacity to AI developers, will go through a wave of failures and mergers. "Some will make it through, but not many," he wrote.

The warning comes as bond investors demand higher yields from AI infrastructure borrowers. CoreWeave, the largest of the neocloud operators, had about $35.6 billion of debt at the end of June.

AI now drives SpaceX revenue

SpaceX has become an AI company as much as a space company since it bought xAI, Musk's AI startup and the owner of the Grok chatbot and the X social network, in February. That deal valued xAI at $125 billion and SpaceX at $1 trillion. SpaceX then listed on Nasdaq in June in a record initial public offering priced at $135 a share.

The company reported last week that third-quarter revenue rose 161% from a year earlier to $14.6 billion. Its AI unit brought in about $7.6 billion, more than half the total, much of it from renting data-center capacity to other AI developers. Starlink and other connectivity services added about $5.3 billion, and the space business about $1.8 billion. SpaceX swung to a net profit of $4.4 billion from a loss a year earlier.

Spending is running far ahead of sales. SpaceX spent about $19.6 billion on capital projects in the quarter, more than its revenue, and about $16.4 billion of that went into AI. Musk said last month that xAI's Colossus 2 data center could more than double its number of Nvidia chips by December.

SpaceX shares traded at about $148 on Monday, giving the company a market value of close to $2 trillion. Musk owns about 42% of the company and controls about 82% of the votes through shares that carry extra voting rights. The stake makes up the largest part of his fortune, which climbed back above $1 trillion last week after the quarterly results lifted the stock.