Key Takeaways
- • SpaceX is seeking $40 billion in new debt, including $10 billion in bank loans and $30 billion in bonds per the FT, to fund AI chip purchases from Nvidia.
- • Ray Dalio, founder of Bridgewater Associates, called AI a "classic bubble" at a Forbes conference in Singapore, saying the market is approaching the point where bubbles typically break.
- • SpaceX raised nearly $86 billion in its June stock market debut and sold another $25 billion in bonds weeks later; it carries a BBB credit rating.
- • Since absorbing Elon Musk's AI firm xAI in February, SpaceX spends more on AI than its rocket and Starlink businesses earn.
- • SpaceX shares closed Friday at $162.57, about 28% below their 52-week high, with 1.31 billion insider shares set to unlock after third-quarter results.
Summary
SpaceX is seeking $40 billion in new debt to purchase Nvidia chips, a request that arrives days after billionaire Ray Dalio said borrowing for AI has pushed markets close to a bubble burst. The package would include $10 billion in bank loans and $30 billion in bonds, according to the Financial Times. The company raised nearly $86 billion in its June stock market debut and sold another $25 billion in bonds weeks later.
Dalio, who founded hedge fund Bridgewater Associates, called AI a "classic bubble" at a Forbes conference in Singapore on Wednesday. His concern centers on debt and rising rates. He argued that investors holding paper gains eventually sell to raise cash, and that this is where bubbles usually break. "We're in the part of the cycle that is before that but approaching that. I think we're close to that," he said.
SpaceX carries a BBB credit rating, two steps below Meta and Alphabet. Since absorbing Elon Musk's AI firm xAI in February, the company spends more on AI than its rocket and Starlink businesses earn. Morgan Stanley analyst Adam Jonas wrote in August that SpaceX may need to borrow about $80 billion a year through 2035, according to The Motley Fool. Of 35 analysts tracking SpaceX, 28 rate the stock a buy, five a hold and two a sell. Their average 12-month price target is $216.21, about 33% above Friday's close of $162.57, with targets ranging from $75 to $450.
The borrowing flows to Nvidia, where all 35 Wall Street analysts covering the chipmaker rate the stock a buy, with an average target of $324.20. SpaceX shares sit about 28% below their 52-week high, and a batch of 1.31 billion insider shares unlocks after third-quarter results. The Motley Fool's Jeremy Bowman wrote that SpaceX would likely fall first in a burst, though he doubts one is near.
The exposure extends beyond SpaceX. According to the Fool, Anthropic has $518 billion in future computing commitments and OpenAI has $665 billion. Oracle shares slid on Thursday after questions over OpenAI's revenue. Dalio's warning ties this spending to one variable: if rates keep rising, the pressure to sell builds.
Dalio, who founded hedge fund Bridgewater Associates, called AI a "classic bubble" at a Forbes conference in Singapore on Wednesday. His concern centers on debt and rising rates. He argued that investors holding paper gains eventually sell to raise cash, and that this is where bubbles usually break. "We're in the part of the cycle that is before that but approaching that. I think we're close to that," he said.
SpaceX carries a BBB credit rating, two steps below Meta and Alphabet. Since absorbing Elon Musk's AI firm xAI in February, the company spends more on AI than its rocket and Starlink businesses earn. Morgan Stanley analyst Adam Jonas wrote in August that SpaceX may need to borrow about $80 billion a year through 2035, according to The Motley Fool. Of 35 analysts tracking SpaceX, 28 rate the stock a buy, five a hold and two a sell. Their average 12-month price target is $216.21, about 33% above Friday's close of $162.57, with targets ranging from $75 to $450.
The borrowing flows to Nvidia, where all 35 Wall Street analysts covering the chipmaker rate the stock a buy, with an average target of $324.20. SpaceX shares sit about 28% below their 52-week high, and a batch of 1.31 billion insider shares unlocks after third-quarter results. The Motley Fool's Jeremy Bowman wrote that SpaceX would likely fall first in a burst, though he doubts one is near.
The exposure extends beyond SpaceX. According to the Fool, Anthropic has $518 billion in future computing commitments and OpenAI has $665 billion. Oracle shares slid on Thursday after questions over OpenAI's revenue. Dalio's warning ties this spending to one variable: if rates keep rising, the pressure to sell builds.
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