Nvidia to raise $25 billion in its first bond offering in five years — Reuters

Nvidia is set to raise $25 billion through a corporate bond offering in the U.S., according to sources cited by Reuters. The company is entering the debt market for the first time since the start of the AI boom, the agency reports. According to its data, this came as a surprise to investors, with demand more than tripling the supply.

Nvidia is set to raise $25 billion through a bond offering in the U.S.—more than originally planned, two sources told Reuters. An earlier source had told the agency that the amount was $20 billion. Sources at CNBC reported the same.

Nvidia disclosed its plans to raise capital in a filing submitted to the U.S. Securities and Exchange Commission on Monday, but did not specify the amount. The offering will consist of seven tranches of bonds maturing as late as 2056, according to the terms of the deal reviewed by Reuters.

Investor demand for the offering reached $85 billion, according to one of the agency’s sources. He said the decision came as a surprise to the market, as the company had done virtually nothing to prepare it for the deal.

The market leader in AI chips has not tapped the investment-grade bond market for five years: Nvidia last raised $5 billion in June 2021, the agency reports. A company spokesperson told Reuters and CNBC that it plans to use the proceeds from the offering for general corporate purposes, including the repayment and refinancing of existing debt. However, according to one of the agency’s sources, the offering is needed not so much to finance capital expenditures as to establish a market benchmark for the cost of future borrowing.

As of the end of April, Nvidia had $13.24 billion in cash and cash equivalents on its balance sheet. The chipmaker’s long-term debt stood at approximately $7.5 billion, while its short-term debt was about $1 billion.

At the same time, the company continues to actively return capital to shareholders. In the last quarter, it generated $49 billion in free cash flow, compared with $35 billion a year earlier, and confirmed that it intends to return about half of that to shareholders by the end of the year. Nvidia raised its quarterly dividend from one cent to 25 cents per share and announced an $80 billion share buyback program.

The chipmaker has thus joined a long list of tech companies linked to the AI boom that have turned to the capital markets. Since November, Alphabet has raised more than $55 billion in new debt, and in early June sold more than $80 billion worth of shares. Impressed by this offering, Meta also began exploring the possibility of raising tens of billions of dollars through a stock offering, the Financial Times reported. According to the publication, the company is seeking new sources of funding for its AI infrastructure. In October, Meta filed for its largest-ever bond offering, worth up to $30 billion. Meanwhile, Supermicro, a manufacturer of servers for neural networks, raised $7 billion last week to cover the cost of purchasing equipment components.

The largest tech companies have already made it clear that they have no intention of scaling back their AI spending: their combined spending this year is expected to exceed $700 billion, compared to approximately $400 billion in 2025, Reuters notes. To keep pace with the rapidly evolving AI sector, Nvidia is actively investing in the development of cutting-edge processors and now releases a new family of chips every year—each with greater AI capabilities than the last.

This article was AI-translated and verified by a human editor