The microchip company Nvidia raised 25 billion dollars through a bond issuance in the United States, the first since 2021, from which it obtained 5 billion. The operation initially aimed to raise 20 billion, but was expanded due to strong investor demand: according to Reuters, orders reached 85 billion, more than three times the amount actually placed.
The operation consists of seven bond tranches, with maturities up to 2056.
WHY NVIDIA LIMITED THE FUNDRAISING (AND WHY IT DECIDED TO BORROW)
Nvidia limited the fundraising to 25 billion dollars to limit the so-called credit spread, that is, the risk premium that the issuer must pay investors compared to a safe investment: in other words, the lower the spread, the lower the cost of financing.
Unlike large technology companies such as Meta and Alphabet, which are issuing bonds to finance investments in artificial intelligence infrastructure, Nvidia’s bond sale apparently was not aimed at supporting new capital expenditures. According to Reuters sources, in fact, it seems that the company’s main goal was to establish a benchmark for its cost of credit.
The proceeds of the operation will, however, be used for general corporate purposes, such as repayment and refinancing of existing bonds. Nvidia’s financial position is solid, considering that at the quarter ended in April its cash amounted to 13.2 billion dollars.
THE COMPARISON WITH THE BIG TECH
The large U.S. technology companies, collectively known as Big Tech, will spend 700 billion dollars this year to acquire the computing capacity necessary for the development of artificial intelligence: this is a figure significantly higher than that of 2025, which was around 400 billion dollars. To finance these investments, they are resorting to bond issuances: Meta (the parent company of Facebook, WhatsApp, and Instagram) presented a plan in October to raise up to 30 billion through bonds, while Alphabet (the parent company of Google) announced in May its first issuance of bonds denominated in Japanese yen.
This need for capital is linked to the construction of new data centers and the purchase of hardware – primarily microchips – used in the training and operation of artificial intelligence models. Nvidia, being the dominant company in the advanced processor market, is the main beneficiary of the artificial intelligence race: not surprisingly, it is the most valuable company in the world, with a capitalization of over 5 trillion dollars.
Nevertheless, Nvidia is not immune to competition and is investing heavily in the development of increasingly powerful processors: among other things, it has reduced the time to release new generations of chips to one year.
