Nvidia seeks $25 billion bond sale as AI funding race accelerates
Nvidia’s first bond deal in five years drew heavy demand, according to the Financial Times, as tech companies raise capital for AI spending.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
Nvidia is preparing to sell $25 billion of investment-grade bonds in the United States, the Financial Times reported, marking the chipmaker’s first debt sale since 2021. The offering is a fresh test of how much exposure investors want to add to companies tied to the AI buildout.
The Financial Times, citing a term sheet, said the deal is structured in seven parts with maturities ranging from two years to 30 years. The sale was increased from an initial $20 billion after investors placed more than $85 billion of orders by early afternoon in New York, the FT reported, citing people familiar with the transaction.
Demand also lowered Nvidia’s expected borrowing cost. The 10-year bond was expected to price at 0.5 percentage points above comparable US Treasuries, down from 0.75 percentage points in early talks, according to one person cited by the FT.
Lauren Wagandt, a portfolio manager at T Rowe Price, told the FT that market conditions had improved after the US-Iran deal, helping Nvidia borrow at a lower cost. Wagandt also said Nvidia is viewed as a high-quality issuer and sells bonds less frequently than some other large technology companies.
Nvidia said it plans to use the proceeds for general corporate purposes, including repaying and refinancing existing notes, according to the FT. Goldman Sachs, JPMorgan and Morgan Stanley are active bookrunners on the transaction, the FT reported.
The planned sale is at least three times the size of Nvidia’s 2021 bond offering, when the company raised about $5 billion during the coronavirus pandemic, according to the FT. If completed, the new issue would lift Nvidia’s outstanding debt to about $30 billion from $8.5 billion, the FT reported.
The borrowing comes as technology companies seek more capital for AI infrastructure. The FT described Nvidia as the main beneficiary of Big Tech’s trillion-dollar spending push on AI, because its chips are central to training and running large language models such as OpenAI’s GPT.
Other AI-linked companies have sought different funding routes as debt and equity markets absorb heavy issuance. The FT reported that Anthropic turned to private credit investors for a $35 billion deal backed by Broadcom, while Alphabet raised $85 billion through an equity issue earlier this month, its first in more than two decades. SpaceX is also pursuing a record $75 billion initial public offering, according to the FT.
Nvidia’s cash generation has surged during the AI spending boom. The FT reported that the company’s free cash flow rose 59 percent to $96.6 billion in the year to January.
Its stock has weakened in recent weeks along with the broader semiconductor market, the FT reported. Nvidia’s valuation peaked at about $5.7 trillion in May before its market capitalization fell below $5 trillion at the end of last week.
The company has also become a major investor in AI developers and suppliers. According to the FT, Nvidia has committed more than $90 billion to companies including OpenAI, Anthropic, xAI, Coherent, Marvell, Lumentum and Corning. The FT also reported that Nvidia has in some cases agreed to act as a backstop or financial guarantor for cloud customers using its chips, including CoreWeave and Nscale.
Tom Murphy, global head of investment-grade credit at Columbia Threadneedle Investments, told the FT that bond investors are paying closer attention to risk created by financial guarantees and close ties among AI companies. Murphy said concern has grown that stress at one company in the AI ecosystem could spread to others.
Nvidia has a double-A credit rating, the FT reported, the third-highest grade. Oracle, another AI-linked borrower with more debt, is rated two levels above junk, according to the FT.
This story draws on original reporting from Ars Technica.