Elon Musk‘s SpaceX (NASDAQ:SPCX) signed a roughly $40 billion chip-financing commitment with Apollo Global Management Inc. (NYSE:APO) as AI debt-market concerns drive up borrowing costs.
Musk said in a Sunday post on X that SpaceX had already closed the $40 billion financing deal, although Monday’s filing disclosed only a binding commitment, with final pricing and closing still pending.
An Apollo-managed entity would buy equipment, including Nvidia Corp. (NASDAQ:NVDA) chips, and lease it to SpaceX for about five years. The interest rate remains undetermined, and closing is expected by year-end.
SpaceX’s Expensive AI Expansion
SpaceX’s Super Intelligence division, including Grok and cloud computing services, generated $7.56 billion in third-quarter revenue, up 830% year over year.
However, its quarterly capital spending hit $16.44 billion, more than twice revenue. The division reported a $431 million operating profit.
The separate leasing structure is intended to keep borrowing off SpaceX’s balance sheet and protect its investment-grade rating, Bloomberg reported. The eventual accounting treatment remains uncertain.
AI Debt Markets Under Pressure
The most expensive portion of the financing could cost up to 8.75%, Semafor reported Monday, compared with 6.65% on SpaceX’s priciest bonds issued in June. The instruments differ, but the figures underscore rising financing costs.
CoreWeave Inc. (NASDAQ:CRWV) has also come under pressure. Its bonds issued in June at a 9.675% yield were yielding roughly 15% by mid-October, Reuters reported.
Morgan Stanley analyst Adam Jonas estimates SpaceX could issue another $230 billion in debt between 2027 and 2029 to finance its expansion.
“This is the biggest risk to our model, and we do not want to downplay it,” Jonas wrote, warning that difficulty raising the money could undermine his forecasts for SpaceX’s growth.
Musk Warns of a Neocloud Shakeout
Musk warned in his Sunday X post that debt markets had “almost entirely shut off access to money” for companies without substantial revenue outside AI data centers.
He predicted “guppy-level death and consolidation” among what he said were more than 200 neocloud providers, companies renting computing power to AI developers.
Musk argues Starlink and launch revenues give SpaceX an advantage. It ended September with nearly $90 billion in cash and marketable securities against roughly $39 billion in debt and finance leases.
On Polymarket, traders put the odds of a qualifying AI downturn by December 31 at roughly 10%. The contract requires three specified distress events within 90 days.
Apollo and Blackstone announced a $35 billion deal to finance chips for Anthropic in June, part of an AI lending boom that could reach $1 trillion, as Benzinga reported last week.
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