Market AnalysisJun 17, 20262 Min
Nvidia’s Next Big AI Bet: Chip Giant Looks To Raise $25 Billion Through Bonds
For the first time in five years, US chipmaker Nvidia Corp. has decided to tap the debt market to fund the ongoing artificial intelligence (AI) boom. The company is seeking to raise up to $25 billion through investment-grade corporate bonds.
A Bloomberg report, in fact, said that the company had already received approximately $85 billion in orders for its bond offering on Monday, exceeding the offer size by over four times.
Nvidia had filed papers for the bond offering with the US Securities and Exchange Commission (SEC) on Monday without disclosing the size. The chipmaker is marketing bonds in seven tranches, with maturities ranging from 2 to 30 years, according to a Reuters report. Price talk on the longest tenor is reportedly a spread of about 0.9 percentage points above Treasuries.
A Nvidia spokesperson told Reuters that the company wants to use the proceeds for general corporate purposes, such as the repayment and refinancing of outstanding notes.
The report highlighted that Nvidia capped the bond issue at $25 billion to keep low credit spreads. Nvidia has about $7.5 billion in long-term debt and another $1 billion in short-term debt.
Notably, Nvidia is tapping the debt market for the first time since 2021. It had raised $5 billion in its last debt offering, with notes maturing as late as 2031.
Responding to the bond deal, Nvidia shares closed up 3.3% on Monday at $212.45. The company reported record fiscal Q1 revenue of $81.6 billion in May, up 85% from a year ago.
Interestingly, technology companies have raised billions of dollars in bonds as they build data centres and infrastructure for AI expansion. Nvidia serves as the key supplier of chips for such projects, even as it has not been building large-scale data centres itself.
Over the past couple of years, the company has been investing heavily in building the most advanced processors, launching a new family of chips every year with higher AI capabilities.
Last month, Nvidia launched Cosmos 3, an open world foundation model for physical AI built on a breakthrough mixture-of-transformers architecture that combines vision reasoning, world generation and action prediction in a single system.
Cosmos 3 is the world’s first fully open omnimodel that can natively understand and generate text, images, video, ambient sound and actions with leading physics accuracy, reducing physical AI training and evaluation cycles from months to days.
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