Debt sale set to test investor appetite for further exposure to AI sector amid a deluge of borrowing.
See full article...
See full article...
Chipmaker Nvidia seeks to raise over $25B in first bond deal since 2021
- Thread starter JournalBot
- Start date
Upvote
119
(120
/
-1)
For the conspiracy minded, this is almost feeling like an old Robert Ludlum pot boiler... "ok, we're going to over extend the financial markets, and then in one move, we'll destabilize everything in order to create global turmoil"
SpaceX being rammed into indexes, IPOs for the other AI outfits, all based on financial smoke and mirrors?
Ugh.
SpaceX being rammed into indexes, IPOs for the other AI outfits, all based on financial smoke and mirrors?
Ugh.
Upvote
102
(104
/
-2)
Company X, "we're investing N billion dollars into company Y"
investigation of company X finances, company Y finances. -> "Um, where is the money coming from?
Upvote
57
(57
/
0)
Why the heck does Nvidia need this cash? They’re producing so much free cash flow on paper.
Upvote
175
(176
/
-1)
/pedant mode: Nvidia designs chips. They sell chips. But they don't actually make them themselves.
Upvote
52
(55
/
-3)
The established players (Nvidia, Google) are trying to soak up all the remaining capital before it can go towards competitors through an IPO
Upvote
58
(58
/
0)
Joe: Mike, why are you taking out a second mortgage on your house?
Mike: I’ve got a bunch of little things I need to get done. And I need to pay off the first mortgage.
Joe:
Upvote
64
(66
/
-2)
I think a number of the bottlenecked manufacturers have been reluctant to expand capacity more rapidly due to concerns about being caught on the downcycle of a notoriously cyclical industry. I could see Nvidia bankrolling memory/storage/fab expansions that TSMC/SK Hynix/Samsung/etc. find too risky to fund themselves.
OTOH, more cynically, maybe Nvidia will use these funds to create even more convoluted data center financing vehicles to keep the bubble going
Last edited:
Upvote
35
(36
/
-1)
The markets have to be irrational if they think we're in the post-deal period at this moment. I know past performance is no guarantee of future results, but come on.
Upvote
48
(48
/
0)
Just doing what they can to finally reach the too big to fail status so the US government is forced to bail them out when the bubble finally pops.
Upvote
14
(14
/
0)
Buying low and selling high I understand, but buying bonds from a company that is peaking? It only makes sense if you are betting the bubble will get bigger.
If Stephen Colbert waits a year maybe he can buy Paramount/Oracle and get his show back?
Not to fund an exciting new growth opportunity, but to service existing debt:
In the same league as Oracle:
https://www.cnbc.com/2026/03/09/oracle-is-building-yesterdays-data-centers-with-tomorrows-debt.html
If Stephen Colbert waits a year maybe he can buy Paramount/Oracle and get his show back?
Upvote
14
(18
/
-4)
View: https://www.youtube.com/watch?v=YAKOWcs8w54
every time without fail I hear about AI financing I just see Mac circling his hand hung on the "where do we make money" part of the halting problem
Upvote
26
(26
/
0)
If before I was terrified, then every day I am more and more inclined to think that it should happen as soon as possible.
Upvote
14
(14
/
0)
ChipHoarder?
ChipGatekeeper?
ChipMiddleManMania?
Charley&TheChipFactory?
*edit to add the final suggestion
Upvote
1
(2
/
-1)
WTF?
Nvidia is printing money right now. How they hell can they be in a position where they need to raise capital?
Nvidia is printing money right now. How they hell can they be in a position where they need to raise capital?
Upvote
43
(43
/
0)
I don't really think it's a matter of need, rather if they can raise this much in relatively cheap debt (especially if they anticipate higher inflation down the road), it's simply be stupid not to do so.
Same logic applies to all of the new equity offerings from megacap companies.
I'm not sure it really bodes well though for overall industry health to have this kind of cash sloshing around and going to arguably stupid investments.
Upvote
39
(39
/
0)
NVIDIAs net income is around $120b a year and growing. To put this in perspective, imagine that you made $253k a year, and had $120k left after expenses and taxes to put into savings, but then decided to borrow 25k to effectively make some investments.
It’s a corp finance exercise, not worth considering. NVIDIA views the debt as less expensive than selling equity.
Upvote
30
(33
/
-3)
I think this is Nvidia betting on an imminent stock market correction. They need to stockpile cash before their stock crashes like a 5090 with bad drivers.
Upvote
29
(30
/
-1)
Very bad sign. When the most solvent/most profitable player is going to debt financing in the middle of a boom.. not good.
Upvote
13
(15
/
-2)
If you are sure to get a higher return than your borrowing rate, it makes sense to borrow cash to invest it (or invest rather than pay low-rate debts).
I wouldn't do that in this market, but it's very common for those companies able to demand cheap rates.
Also, Nvidia grew a lot in the last few years, so they may have borrowed at the higher inflation-peak rates. Borrowing at a lower rate to repay higher-rate debt makes sense.
Upvote
33
(34
/
-1)
nVidia just spent $80 billion buying back their own stock.
They obviously don't need to raise money through debt financing. This seems to be a way for nVidia to find bag holders for potential bad bets. If AI boom turns to a bust, this lays the groundwork for them to ask for a government bailout by arguing their debt is bad and if they default on their debt it will cause too much harm.
They may not get the bailout, but they may.
They obviously don't need to raise money through debt financing. This seems to be a way for nVidia to find bag holders for potential bad bets. If AI boom turns to a bust, this lays the groundwork for them to ask for a government bailout by arguing their debt is bad and if they default on their debt it will cause too much harm.
They may not get the bailout, but they may.
Upvote
13
(15
/
-2)
I have a thought experiment. Say we have got to 2026 and the transformer (LLM type, not electrical type) had not been invented. All the AI excitement was based on LSTM and the billions/trillions invested in that.
What stops the AI world being turned upside down by the 2027 invention of the transformer in this imaginary timeline?
Edited for clarity.
What stops the AI world being turned upside down by the 2027 invention of the transformer in this imaginary timeline?
Edited for clarity.
Last edited:
Upvote
7
(7
/
0)
This is just NVidia monetizing its credit rating. They borrow at exceptionally low rates, then invest the cash in higher risk investments with higher returns. It’s the moral equivalent of a very wealthy person trading stocks on margin loans.
Some people would say that’s just the global financial market working like it’s designed to. Others would say it’s the rich using their wealth to get even richer, at the expense of everyone else. And both perspectives would be correct.
Some people would say that’s just the global financial market working like it’s designed to. Others would say it’s the rich using their wealth to get even richer, at the expense of everyone else. And both perspectives would be correct.
Upvote
31
(32
/
-1)
FTA:
"When completed, it will more than triple Nvidia’s debt outstanding to about $30 billion from the current level of $8.5 billion."
This is not to retire debt, at least not entirely. My gut is it has to do with all these circular investment deals, but it's anyone's guess how.
Upvote
14
(14
/
0)
Resistance
Wise, Aged Ars Veteran
It's really starting to look like the AI industry wants more money than is available.
Upvote
14
(14
/
0)
They don't need to, it's about soaking up what they can from the marked while they can before it all crashes. So that they will be standing with a full war chest as a survivor among all the AI rubble
Upvote
11
(11
/
0)
Which is exactly what will pop the bubble, when the capital demand and valuations finally outstrip what investors are willing or able to front, when they finally hit the "that's too rich for my blood" moment, and the line stops going up. Taht's right when it will start to crash down to the netherworld
Upvote
8
(8
/
0)
Yep, I bought an AMD card for my new build because screw that slop they were pushing
Upvote
7
(7
/
0)
Well, the question doesn't make that much sense, because LSTMs are just a type of network whereas LLMs are an application. LSTMs are more comparable to the Attention mechanism, really.
But yeah, hypothetically a new technology can always turn any market upside down. One of the big fears for Nvidia would be if a technology arrives that can do all the LLM stuff but in a much more efficient manner (e.g. being able to run on laptop NPUs). More efficiency means fewer data centres, means less money in the AI boom. Which I suppose is why they're trying to get agents to be a thing (because then they can just spin up more demand at will, rather than waiting for humans to do messy things like breed so their can be more humans to increase demand for services).
Upvote
4
(4
/
0)
Past performance indicates the markets still think Trump is a source.
Upvote
2
(2
/
0)
Yeah; the shock doctrine is what happens after what happens when all the regulators are gone. I don't really see it being actually planned; many of the people who play in the market actually lose when a lot of wealth gets destroyed.
Upvote
1
(1
/
0)
These investments are built around the idea that we just keep scaling up existing LLM architectures. More capable LLMs will require more capable hardware (from Nvidia), more datacenter capacity to power them, and more power generation to feed them, so the hardware/datacenter/AI infrastructure investment boom keeps on going.
But what happens if companies decide the value proposition from the largest models isn't there (not necessarily because they don't want to use AI - smaller, open models may suffice). What happens if someone comes up with a new (probably neurosymbolic) architecture that is more efficient and breaks the scaling cycle? What happens if, in an attempt to chase profitability, the current AI powerhouses raise prices and get undercut by new entrants to the market (potentially overseas entities with state-backed funding)?
There is a whole lot of money being invested and cycled through a highly-speculative market. There are so many possiblities for the whole thing to come crashing down, or for the market to become commoditized. Of all companies in this industry, Nvidia is probably best-placed, because (unless there's some dramatic technological breakthrough) there will continue to be significant demand for GPUs. But the company is doing everything it can to increase its exposure to the riskier end of the market. I just don't understand.
Upvote
17
(17
/
0)
Upvote
1
(4
/
-3)