$40 Billion Bond Issuance, Interest Rate as High as 8.3%! SpaceX (SPCX.US)'s AI Gamble Also Exposes the "Financing Winter" of AI Infrastructure

According to media reports citing people familiar with the matter, SpaceX (SPCX.US) is preparing to complete a debt issuance of up to $40 billion, with interest rates significantly higher than its previous borrowing costs, reflecting growing investor concerns about financing for artificial intelligence (AI) infrastructure. The highest-risk portion of the issuance is expected to yield about 8.3%, while a relatively lower-risk tranche, partly backed by some of the company's computing chips, may carry an interest rate of about 7.75%, according to the people familiar with the matter. The debt issuance, arranged by Apollo (APO.US) and Goldman Sachs Group, Inc. (GS.US), could be completed as early as next week. Borrowing costs are expected to be more than one percentage point higher than the yields on SpaceX's existing outstanding bonds, though final pricing may still change. For investors, the higher financing costs highlight the risks accompanying SpaceX's ambitious AI expansion plans. As the company invests billions of dollars in building infrastructure, rising interest expenses could put pressure on its profitability and cash flow. The widening yield gap between existing debt and the new issuance also indicates that lenders are demanding higher returns to compensate for the financial risks facing SpaceX. SpaceX's third-quarter results, released after the market close on Tuesday, validated its "cash-burn-to-monetization" closed loop for the first time. Data showed that SpaceX's third-quarter revenue reached $14.575 billion, far exceeding the analyst consensus of $12.72 billion, up 161% from $5.576 billion in the same period last year and about 87% from $7.814 billion in the second quarter. Third-quarter operating profit reached $2.791 billion, compared with an operating loss of $273 million in the same period last year and an operating loss of $143 million in the second quarter; third-quarter net profit reached $4.404 billion, far exceeding the analyst consensus of $1.57 billion to $1.88 billion, a substantial improvement from a net loss of $1.054 billion in the same period last year, achieving a turnaround to profitability. Under U.S. generally accepted accounting principles, SpaceX's third-quarter diluted earnings per share were $0.35, also far exceeding the analyst consensus of $0.15, compared with a loss per share of $0.36 in the same period last year. The explosive growth of the Superintelligence (SI) segment was an important reason for SpaceX's third-quarter earnings beat. The business generated revenue of $7.56 billion, up 195% quarter over quarter and 830% year over year, exceeding market expectations by about 20% and accounting for about 52% of the company's total revenue. A company known for building rockets now derives more than half of its revenue from AI computing power and model services. At the same time, SpaceX is accelerating its AI computing power deployment. Elon Musk said on the earnings call that the company expects to add 10 gigawatts of AI computing power by 2027. The company is also stepping up capital expenditurefourth-quarter 2026 capital expenditure is expected to reach $35 billion to $40 billion, about twice the nearly $20 billion in capital expenditure in the third quarter. Despite the better-than-expected quarterly results, SpaceX's existing bonds have recently declined as investors weigh its aggressive capital expenditure plans and growing debt burden. The company is also exploring a potential merger with Tesla, Inc. (TSLA.US). Meanwhile, the cost of insuring against a default on SpaceX's debt has also risen, further indicating deteriorating sentiment among credit investors. SpaceX's fundraising comes at a time of overall weakness in the AI lending marketbonds of AI cloud computing provider CoreWeave (CRWV.US) fell sharply last week due to growing concerns about its debt-financed expansion; the credit risk of Meta Platforms (META.US) rose to a record high on Thursday as plans to increase capital expenditure further intensified market concerns about AI-related borrowing.