NVIDIA Corporation (NVDA.US) returns to the bond market after five years: plans to issue at least $20 billion in bonds, sparking a new wave of financing frenzy in the Silicon Valley AI sector.

Since the wave of artificial intelligence (AI) has swept across the globe, Silicon Valley tech giants have been using all means to raise funds to compete for computational power. Following Alphabet Inc. Class C (GOOGL.US) announcing an $85 billion equity financing, Amazon.com, Inc. (AMZN.US) and Microsoft Corporation (MSFT.US) issuing bonds consecutively, the absolute leader in the AI chip field, NVIDIA Corporation (NVDA.US), has also knocked on the door of the investment-grade bond market. According to sources, NVIDIA Corporation plans to raise at least $20 billion through the issuance of high-grade bonds, marking the company's return to the corporate bond market for the first time since 2021. It is reported that NVIDIA Corporation intends to issue seven tranches of bonds with maturities ranging from 2 to 30 years, with the initial pricing range for the longest variety at a premium of about 90 basis points over U.S. Treasury bond yields. Sources said that the funds raised will be used for general corporate purposes, including the repayment and refinancing of existing notes. JPMorgan Chase, Morgan Stanley, and Goldman Sachs Group, Inc. are serving as joint lead underwriters for this issuance. It is understood that NVIDIA Corporation last entered the investment-grade bond market in June 2021 with a financing of $5 billion. This bond issuance comes as NVIDIA Corporation is striving to meet the strong demand for its AI accelerators (including the H100 and upcoming Blackwell series). Capital expenditures have significantly increased, with billions of dollars being invested in data center capacity and manufacturing processes. By issuing bonds instead of equity financing, NVIDIA Corporation can make full use of its strong credit rating and avoid diluting shareholder equity. For NVIDIA Corporation, the timing is strategic: with interest rates stabilizing and investor demand for AI-related assets remaining strong, the company is likely to lock in relatively low yields. "This reflects confidence in NVIDIA Corporation's long-term growth trajectory," a Wall Street credit strategist said. "Essentially, they are saying, we can borrow money at low cost now for future investments." NVIDIA Corporation declined to comment on the bond issuance plan. The company recorded a net profit of $16.6 billion in its most recent quarter, highlighting its strong cash generation capability. However, the AI arms race is a capital-intensive industry, and even cash-rich companies are seeking external funds to accelerate their expansion. Rating agencies have highly praised NVIDIA Corporation's financial position. S&P Global, Inc. recently upgraded NVIDIA Corporation's credit rating to AA, while Moody's Corporation also raised NVIDIA Corporation's senior unsecured bond rating to Aa1. S&P cited the AI system's "insatiable demand," projecting that NVIDIA Corporation's revenue for the fiscal year 2027 will grow by 82% to $394 billion and further increase to $544 billion in 2028, with free cash flow expected to reach $276 billion in 2028. Analysts forecast the company's net profit to reach $227 billion in 2027, and further rise to $305 billion in 2028. Not just NVIDIA Corporation: AI giants embark on a frenzy of financing, with bonds and equity financing happening simultaneously This move also echoes the widespread trend of Silicon Valley tech giants, including Microsoft Corporation and Alphabet Inc. Class C, financing AI infrastructure. According to Dealogic data, "mega-scale AI enterprises" including Alphabet Inc. Class C, Amazon.com, Inc., Meta (META.US), Microsoft Corporation, and Oracle Corporation (ORCL.US) have collectively issued $159 billion in bonds this year, significantly higher than the $108 billion in 2025 and $17 billion in 2024. Just four large tech companies are expected to spend over $670 billion this year alone on data centers and related AI fields, a level of investment that exceeds even the expansion of the U.S. railroads in the 1850s as a proportion of the economy. Financing channels go beyond the bond market. In early June, Alphabet Inc. Class C announced a $85 billion equity financing plan, with Berkshire Hathaway (BRK.A.US) subscribing $10 billion privately, and the public offering portion being raised from $30 billion to $45 billion due to oversubscription, making it their largest equity financing in history, with the funds going entirely towards AI infrastructure. It has also been reported that Meta executives are discussing the possibility of issuing several billion dollars worth of new shares, providing funds for this year's potential capital expenditure of up to $145 billion and even higher in 2027 in AI-related projects. Meanwhile, following SpaceX's successful IPO, OpenAI and Anthropic are also advancing with IPO plans, with 2026 expected to be a year with an unprecedented scale of IPO financing. In terms of market depth, the tentacles of tech giants have extended to the global bond market. Morgan Stanley predicts that global AI-related bond issuances in 2026 will almost double to $570 billion from the previous year; as of the end of May, around $236 billion in AI-related debt financing has been issued globally, roughly four times the amount raised during the same period last year. Alphabet Inc. Class C has issued bonds in U.S. dollars, Canadian dollars, Japanese yen, euros, Swiss francs, and pounds sterling, including a rare 100-year pound sterling bond; Amazon.com, Inc. raised 14.5 billion through eight tranches in March, setting a record for the largest euro-denominated corporate bond issuance in history. However, large-scale debt issuance has also sparked concerns in the industry about an AI investment bubble. UBS Group AG estimates that the capital expenditures of mega-scale cloud service providers in 2026 are expected to consume nearly 100% of operating cash flow, compared to an average of about 40% over the past 10 years, with the bond market filling this financing gap. Some investors believe that AI infrastructure construction may see uncontrolled expansion, leading to the risk of overinvestment for companies, with poorly performing participants eventually being phased out of the market. S&P also pointed out that NVIDIA Corporation still relies heavily on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) for producing advanced chips, and that production disruptions or political tensions could affect its supply capacity. In any case, the capital expenditure race in the AI field is far from over. Wall Street investment banks predict that the corporate bond financing for companies participating in the AI arms race will reach $1.5 trillion in the next five years. NVIDIA Corporation's return to the bond market after five years is the latest testament to the financing frenzy of tech giants and indicates that this high-stakes gamble will continue to escalate.