‘The Big Money Show’ panel discusses SpaceX reporting a 161% increase in revenue as Elon Musk addresses a potential Tesla merger.
Elon Musk said SpaceX has closed $40 billion in debt financing to buy graphics processing units for artificial intelligence operations, highlighting the huge sums being spent in the race to build AI computing capacity.
Musk announced the funding on Sunday, saying SpaceX was able to secure the money because of its investment-grade status and the revenue it generates outside of AI through its Starlink satellite internet and rocket launch business.
“SpaceX is closing in on $40B in debt for GPUs, but we are investment grade and have Starlink & launch revenue,” Musk said.
Graphics processing units, or GPUs, are advanced chips that provide the computing power needed to train and operate AI systems.
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Elon Musk says SpaceX is closing in on $40 billion in debt financing to buy advanced computer chips for artificial intelligence operations. (Francis Chung/Politico/Bloomberg via Getty Images/Getty Images)
Reuters previously reported that SpaceX was in talks with banks and asset managers to raise $40 billion to buy Nvidia AI chips.
“This is mainly callable debt to buy GPUs that will come in Q1 and Q2,” Musk said in a follow-up post on X, which confirmed that GPUs will arrive in the first half of 2027. “It’s not a major factor in this quarter.”
It was not immediately clear whether investors had agreed to the terms of the loan’s price.
The funding underscores the cost of the AI race, as companies spend heavily on advanced chips and other computing infrastructure.
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SpaceX CEO Elon Musk announced the $40 billion funding deal on Sunday, citing the company’s investment grade status and revenue from Starlink and rocket launches. (Fabrice Coffrini/AFP via Getty Images/Getty Images)
SpaceX Chief Financial Officer Bret Johnsen said the company expects to spend $35 billion to $40 billion on capital expenditures in the fourth quarter, according to Reuters.
Musk also said that the lending situation has worsened significantly for companies that rely heavily on AI infrastructure.
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“As of a few weeks ago, the debt market almost completely closed access to money for companies that did not have significant profits from AI data centers,” he said.
Musk warned that many of these companies could struggle to survive.
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X Technology Chief Executive Officer Elon Musk speaks at a conference on June 19, 2024, in Cannes, France. (Richard Bord/WireImage/Getty Images)
“That means the 200+ neoclouds are going to see guppy-level death and consolidation,” Musk said, referring to a company that rents computing power built primarily for AI customers. “Some will make it through, but not many.”
SpaceX’s established businesses, including Starlink and rocket launches, provide revenue streams outside of AI operations.
SpaceX’s third-quarter revenue rose 161% from a year earlier to $14.58 billion, according to Reuters.
Musk suggested last week that a potential merger of Tesla and SpaceX would be a “great idea.”
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He also said the two companies had formed a special committee of independent directors to explore a potential deal, although Musk stressed that a merger was not certain.
Reuters contributed to this report.