SpaceX's $40 Billion Loan for Nvidia Chips Turns Colossus Into a Bond Story
SpaceX wants $40 billion of mostly investment-grade debt for Nvidia chips, so pension funds will be lending against Starlink's cash to fill Colossus 2 while Nvidia gets paid on delivery.
SpaceX is lining up debt to buy Nvidia chips for its xAI data centers, the Financial Times reported on Tuesday, with Apollo Global Management leading and the bond fund Pimco among the lenders in talks. The package comes to about $40 billion, and roughly three quarters of it is meant to be sold as investment-grade bonds. Every dollar is earmarked for one vendor, because Elon Musk has said Nvidia is the only chip going into these buildings. $SPCX slipped about 1% after hours on the report while $NVDA ticked up.
On Friday SpaceX agreed to buy Grain Management's nationwide 800 MHz spectrum for about $8 billion in cash, the low-band airwaves it wants for turning Starlink Mobile into a "major" US phone carrier. (Grain is a private spectrum investor, and the deal still needs FCC approval.) AT\&T, Verizon and T-Mobile fell 6% to 7% after hours. $SPCX opened Friday up about 3%, trading around $165, which is a little over 20% above its $135 IPO price from June.
The chip loan moves the Colossus bill off a string of private lease vehicles and onto SpaceX's own credit, where Starlink's cash stands behind it. As of Friday that same cash also has a phone carrier to pay for. Nvidia, for its part, has spent the past two months setting up financing for buyers like this one.
How xAI paid for Nvidia chips before
Until this year xAI mostly rented its GPUs instead of buying them on its own credit. Valor Equity Partners (the private equity firm that has backed Elon's companies for years) set up vehicles that bought the Nvidia chips and leased them to xAI, and Apollo lent into those vehicles, starting with $3.5 billion in November 2025. A second loan for $3.4 billion was close to done by February. If xAI stopped paying, all the lender had was the chips and a lease with a startup that had no credit rating.
Then SpaceX bought xAI and went public in June, and within days all three agencies rated it investment grade: Baa1 from Moody's, BBB+ from Fitch and BBB from S&P. Its debut bond raised $25 billion, mostly to refinance debt from X and xAI. So the new deal is the first time the chip purchase itself goes straight onto a rated balance sheet at this size.
Why investment grade matters for Colossus 2
BBB is the bottom rung of investment grade, which is what lets insurers and pension funds buy the bonds. Those buyers are really lending against Starlink, which earned $4.4 billion of operating profit in 2025, and they're trusting it to cover an AI build that burns far more cash than Starlink brings in.
The spectrum deal draws on the same money. SpaceX is paying the $8 billion in cash, and it comes on top of the mid-band licenses it already bought from EchoStar for Starlink Mobile. Shareholders bid the stock up anyway. But for whoever lends the $40 billion, it's another $8 billion leaving the same Starlink cash that pays their interest.
SpaceX's free cash flow was negative $14.12 billion last year, and KeyBanc expects about negative $28 billion this year. S\&P's analysts see nearly $230 billion of negative cash flow through 2029, and they pencil in an $85 billion debt raise for 2028 alone. Moody's named the AI build as the thing holding its own rating down.
Bond buyers already charge extra for it. The 10-year notes from June priced 140 basis points (1.4 percentage points) over Treasuries, about 40 more than similar BBB paper. With the 10-year Treasury yield around 5.31% on Tuesday, the same spread today works out to roughly 6.7% a year (my math, using June's spread). Those interest payments come out of the same cash that Google's Colossus rental, up to $920 million a month at full capacity, is supposed to bring in, and once this year ends either side can cancel that contract on 90 days' notice.
Nvidia sells the chips and helps line up the lenders
You can see the other half of this in what Nvidia did in August. It signed agreements with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to build financing platforms that mobilize more than $500 billion for its customers. Nvidia also offered to cover up to 25% of the gap if financed GPUs resell for less than expected. Apollo, the lead on the SpaceX deal, is one of those six partners.
Nothing in the reporting says Nvidia is backstopping this particular loan, and with a BBB borrower I doubt it has to. But Nvidia sits on the other side of SpaceX in another way: it holds 122.8 million SpaceX shares, left over from its $10 billion investment in xAI. At Friday morning's price that stake is worth about $20 billion (my math). So Nvidia owns a piece of the borrower as well as selling it the chips.
The revenue lands at Nvidia as data center compute sales when the racks ship. Elon said on September 25 that Colossus 2 was running 110,000 GB200s and 440,000 GB300s. He also laid out three more batches of 220,000 GB300s each, in early October, in November and, "if we get lucky," in late December. The FT says the financing closes in 2027, so the $40 billion is mostly next year's Nvidia order. Nvidia gets paid on delivery, while the bondholders carry those chips for as long as the bonds run. The longest of June's bonds runs to 2056.
Whoever lends the $40 billion is betting on Starlink's cash at least as much as on Grok. I'm watching what spread it prices at, because that's the first clean market price on what a pension fund charges to hold an Nvidia order for years.