Chipmaking giant Nvidia Corp. sold $25 billion of high-grade bonds, joining a wave of jumbo debt offerings from tech heavyweights as investors clamor to get exposure to the artificial intelligence boom.
The deal, priced on Monday, attracted as much as $85 billion of orders or more than three times the size of the bond, according to a person with knowledge of the matter. Nvidia’s first offering since 2021 was boosted from an initial target of about $20 billion, underscoring strong investor demand.
Nvidia joins companies such as Alphabet Inc. and Amazon.com Inc. flooding debt markets with hundreds of billions of dollars of issuance as they build data centers and other infrastructure needed for AI’s rapid expansion.
The Santa Clara-based company is often a supplier for these projects, becoming a cornerstone for the AI ecosystem and the world’s most valuable business in the process. It is spending heavily to support firms that will help build demand for AI, taking a $5 billion stake in chipmaker Intel Corp., investing as much as $10 billion in model maker Anthropic PBC and contributing $30 billion to a massive funding round for OpenAI. It’s also boosting payouts to shareholders.
Like many big tech companies, Nvidia is generating heavy profit and cash flow from the artificial intelligence boom. The company is expected to generate more than $200 billion in free cash flow in the fiscal year ending Jan. 31, according to the average of analyst estimates compiled by Bloomberg.
Nvidia sold notes in seven parts with maturities ranging from two to 30 years, another person said, asking not to be identified because they aren’t authorized to speak publicly. The yield on the longest portion tightened by 0.25 percentage point to 0.65 percentage point more than Treasuries as orders swelled. Proceeds will refinance outstanding debt, among other uses.
The deal was marketed without the investor calls that banks typically hold before investment-grade bond sales.
“I’m not surprised they would do a drive-by,” CreditSights Inc. analyst Andy Li said. “Nvidia has a dominant market and financial position, so they don’t have to market themselves hard to investors.”
So far, investors have readily absorbed debt deals from tech giants. Nvidia’s bond was particularly attractive because the company has strong credit ratings, is a rare bond issuer and avoids much of the construction risk that typically accompany data center-related financings.
Nvidia stands to benefit from lower borrowing costs, with an agreement between the US and Iran to end their conflict helping fuel a rally in the bond market. A measure of risk for investment-grade debt has fallen to its lowest level since early February, before the conflict began, spurring a rush of borrowing across all corners of credit.
Despite months of war, credit spreads have largely remained attractive as investors have used their cash stockpiles for deals. US high-grade bond funds have been inundated with money, notching 13 straight months of inflows, according to LSEG Lipper data.
A relatively cheap, long-dated debt sale could help lower Nvidia’s average cost of capital and enhance the funding of strategic AI partnerships, including with OpenAI, without weakening its AA credit profile, Bloomberg Intelligence analyst Robert Schiffman wrote in a note to clients.
Representatives for JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, the banks running the offering, declined to comment. A Nvidia spokesperson referred requests for comment to the company’s filing on the offering.
Nvidia was among eight firms tapping the investment-grade bond market on Monday, for a total $36 billion of issuance.
–With assistance from Maggie Eastland, Kevin Kingsbury, Ian King and Caleb Mutua.
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