Nvidia raises $25B in bond sale, its largest debt deal ever

Key Takeaways

• Nvidia's $25B bond sale attracted $85B in investor orders, more than tripling its outstanding debt to $30B
• The offering's 10-year portion priced at 0.5 percentage points above Treasuries, tightening from initial discussions
• Growing financial interdependence among AI companies raises concerns about concentrated systemic risks

Nvidia sold $25 billion in investment-grade bonds on Monday, its first debt offering since 2021 and the largest in the company's history. Investor demand was overwhelming: orders exceeded $85 billion by early afternoon in New York, forcing the chipmaker to upsize the deal from an initial $20 billion target.

The seven-part offering spans maturities from two to 30 years. Strong demand allowed Nvidia to tighten pricing on the 10-year portion to 0.5 percentage points above US Treasuries, down from 0.75 percentage points in initial discussions. When the deal closes, Nvidia's total debt will more than triple to roughly $30 billion from $8.5 billion.

Why is Nvidia raising debt now?

Favorable market conditions after the US-Iran deal gave Nvidia a window to lock in relatively cheap long-term financing. Lauren Wagandt, a portfolio manager at T Rowe Price, pointed to the timing: "It's a very high-quality company at the end of the day. And it doesn't come to the market as often as the other tech names."

The company said it will use proceeds for "general corporate purposes, including repayment and refinancing of outstanding notes." But the scale of the raise suggests broader ambitions. Nvidia has committed more than $90 billion to AI developers like OpenAI, Anthropic, and xAI, plus suppliers including Coherent, Marvell, Lumentum, and Corning.

In some cases, Nvidia has also agreed to act as a financial guarantor for customers building cloud computing services using its chips, including CoreWeave and Nscale. These arrangements tie Nvidia's balance sheet to its customers' success in ways that traditional chipmakers never faced.

How does this compare to other tech funding?

The bond sale arrives during a flood of tech capital-raising. SpaceX's record $75 billion IPO hit markets recently. Alphabet issued equity for the first time in two decades, pulling in $85 billion. Anthropic turned to private credit for a $35 billion deal backed by Broadcom.

Nvidia's previous bond sale in 2021, during the pandemic, raised about $5 billion. Monday's deal is at least five times larger. The contrast reflects both Nvidia's transformed financial position and the sheer scale of capital now flowing into AI infrastructure.

What are the risks investors are watching?

Despite the demand, some bond investors worry about circular financing in the AI sector. Nvidia invests in AI companies that buy Nvidia chips. It guarantees loans for cloud providers that run Nvidia hardware. If one player stumbles, the chain reaction could be severe.

“The market has started to get worried about these circular financings, because if somebody in that ecosystem is having a problem, then the whole thing could be a problem.”

— Tom Murphy, global head of investment-grade credit, Columbia Threadneedle Investments

Nvidia holds a double-A credit rating, the third-highest score, which helps explain the tight pricing. For comparison, Oracle sits just two notches above junk status. But credit ratings reflect current conditions. The question is whether AI spending can sustain its pace.

Nvidia's stock has retreated from its May peak near $5.7 trillion market cap, falling below $5 trillion last week alongside the broader semiconductor sector. The bond sale locks in capital before any further market softening.

What does this mean for AI infrastructure spending?

The bond sale signals that Nvidia expects AI infrastructure buildout to continue for years. By issuing debt at maturities up to 30 years, the company is betting that demand for its chips will remain strong enough to service those obligations through multiple technology cycles.

Goldman Sachs, JPMorgan, and Morgan Stanley ran the transaction. The oversubscription ratio of more than 3x suggests institutional investors share Nvidia's long-term thesis, at least for now.

The deal also establishes a liquid benchmark for Nvidia's cost of capital. With deep, traded bonds across multiple maturities, the company gains flexibility for future financing. Whether that flexibility gets used for R&D, acquisitions, or further investments in AI startups remains to be seen.

Frequently Asked Questions

How much did Nvidia raise in its 2026 bond sale?

Nvidia raised $25 billion across a seven-part bond offering with maturities ranging from two to 30 years. The deal was upsized from an initial $20 billion target after receiving $85 billion in investor orders.

When was Nvidia's last bond sale before this?

Nvidia's previous bond sale occurred in 2021 during the pandemic, when it raised approximately $5 billion. The 2026 offering is at least five times larger.

What will Nvidia use the bond proceeds for?

Nvidia stated it will use net proceeds for general corporate purposes, including repayment and refinancing of outstanding notes. The company has also committed over $90 billion to AI developers and suppliers.

What is Nvidia's credit rating?

Nvidia holds a double-A credit rating, the third-highest score available, which allowed it to price debt at relatively tight spreads above US Treasuries.

Why are investors concerned about AI circular financing?

Nvidia invests in AI companies that buy its chips and guarantees loans for cloud providers using its hardware. This interdependence means problems at one company could cascade through the ecosystem.

Source: Ars Technica