- NVIDIA is launching a seven-part bond offering in the U.S. to raise approximately $20 billion, marking one of the largest debt issuances by a semiconductor company.
- The move comes as the AI chip giant seeks to capitalize on favorable financing conditions to fund expansion in AI infrastructure and data centers.
- Investor demand is expected to be strong, given NVIDIA's stellar financial performance and dominant position in the AI market.
NVIDIA Taps Debt Markets for AI Growth
NVIDIA Corp. is set to raise about $20 billion through a seven-part U.S. bond issuance, according to a person familiar with the matter. The offering, which includes tranches ranging from three to 40 years, is expected to price later this week and will be the company's largest debt sale to date.
The chipmaker, whose market value has surged past $3 trillion amid the AI boom, is taking advantage of relatively tight credit spreads and robust investor appetite for high-grade corporate debt. Proceeds are likely to be used for general corporate purposes, including capital expenditures, research and development, and potential acquisitions.
"NVIDIA's access to cheap debt is a sign of its financial strength, but also of the market's confidence in the longevity of the AI cycle," a credit analyst said. The company generated over $60 billion in free cash flow last year, but the bond sale allows it to lock in low rates while preserving cash for future investments.
The bond offering is being led by several major banks, and the company has received strong indications of interest, the person said. Pricing details are expected later this week.
This issuance follows a trend of tech giants tapping debt markets for cheap funding. Last year, Apple Inc. raised $5.5 billion in a multi-tranche bond deal, and Microsoft Corp. has also been active in the bond market.
NVIDIA did not immediately respond to a request for comment.
Correction: An earlier version of this article misstated the timing of the bond issuance. It is expected to price this week, not last week.