Nvidia Stock Hits Record as SpaceX Seeks $40B for AI Chips

Nvidia stock remained near record territory after reaching an intraday high of $243.37 on Oct. 6. NVDA later closed at $239.24, extending a rally that has pushed its market capitalization toward $6 trillion.

The latest demand catalyst comes from SpaceX, which is seeking roughly $40 billion to finance Nvidia AI-chip purchases. That planned spending adds another large customer to an already expanding pool of hyperscalers and AI infrastructure companies buying Nvidia hardware.

SpaceX to Raise Cash to Buy Nvidia Chips

SpaceX has slowly become one of Nvidia’s biggest clients as it continues to bet on the artificial intelligence industry. Now, the company is seeking to grow this relationship by borrowing $40 billion to buy Nvidia chips.

According to the FT, most of this financing will be arranged by Apollo Global Management, one of the biggest companies in the private credit and equity companies in the world. $10 billion of these funds will be in form of bank loans, while the remaining $30 billion will be in the form of investment-grade debt.

SpaceX and Nvidia have had a long relationship. Indeed, Nvidia is now one of SpaceX’s biggest shareholders with a stake worth over $21 billion.

SpaceX has been aggressively betting on the AI industry. On the one hand, it has continued to roll out more updates to its Grok bot as it seeks to bridge the gap with other top companies like OpenAI and Anthropic.

At the same time, it is seeking to become a big player in the GPU rental industry. It has already received large orders from top companies like Google, Anthropic, and Reflection AI. Its eventual goal is to have orbital data centers, which will likely use Nvidia GPUs.

Nvidia will benefit from this deal because most of the money will come to its business. This is on top of what other companies are spending in the data center industry. For example, firms like Microsoft, Google, Meta Platforms, and Amazon are all continuing to accelerate their AI spending.

This spending explains why its business continues to grow. Its last earnings report showed that its revenue jumped to over $104 billion, while its profit and free cash flow continued surging. The management expects that its revenue will jump by 70% next year.

Ray Dalio is Warning That the AI Bubble May Burst

Meanwhile, Ray Dalio, founder of Bridgewater Associates, a hedge fund with over $100 billion in assets, warns that the AI bubble may burst any time soon.

He cited the rising interest rates globally and the fact that the debt in the industry has moved to substantial levels. Recent data shows that the ten- and thirty-year bond yields have jumped to the highest levels in decades.

At the same time, he believes the bubble will burst due to the need to convert wealth into cash.

Dalio joins other top analysts who have warned that the bubble will burst. For example, Michael Burry has argued that the bubble will pop when neocloud companies start to factor in depreciation of the chips they are buying from Nvidia.

On the other hand, some analysts believe that there is no AI bubble, citing the cheap valuations of the biggest companies in the industry like Nvidia and Micron.

NVDA Stock is Bullish But Forming a Risky Pattern

The daily chart shows that the NVDA shares have been in a strong rally this year. It recently jumped above the crucial resistance level of $236, its previous all-time high. It also remains above all moving averages as the Relative Strength Index (RSI) continues rising.

The risk, however, is that it has formed a rising wedge pattern, consisting of two converging trendlines. This pattern suggests that it has more upside, potentially to $250, and then pullback, possibly as the earnings season continues.

This article is for informational purposes only and does not constitute financial or investment advice. Stock prices, analyst views and technical patterns may change as market conditions evolve.