Nvidia plans to raise about $20 billion in first debt sale since start of AI boom

Nvidia is gearing up to secure approximately $20 billion through a significant debt offering, marking its first bond sale since the onset of the AI boom, according to sources familiar with the situation. The chipmaker disclosed its intentions in a recent SEC filing, although it did not specify the exact amount to be raised. Earlier this year, Nvidia had indicated the possibility of raising up to $25 billion by issuing unsecured commercial paper notes. Those familiar with the negotiations, who wished to remain anonymous, confirmed the $20 billion target, which has yet to be made public. Following the news, Nvidia's stock rose by 3% on Monday and has increased by around 13% throughout the year. This move places Nvidia among a growing list of tech companies linked to the artificial intelligence sector that are turning to capital markets for funding. Earlier this month, Alphabet announced its plans to raise $85 billion through equity-related offerings and has already secured over $55 billion in new debt since November. Additionally, Super Micro revealed $7 billion in financing deals last week to support hardware component purchases. Amazon also made headlines after raising around $54 billion in debt this year through bond sales in both the U.S. and Europe, and it announced intentions to raise about $10 billion in a Canadian debt offering. Currently, Nvidia holds approximately $7.5 billion in long-term debt and an additional $1 billion in short-term obligations. In its previous debt issuance in 2021, the company raised $5 billion, with notes set to mature as far out as 2031. At that time, Nvidia was considerably smaller, reporting revenue of about $27 billion for fiscal 2022, in stark contrast to its projected $216 billion revenue for fiscal 2026. The launch of OpenAI's ChatGPT in late 2022 served as a pivotal turning point for Nvidia, fueling an unprecedented growth rate as AI model companies and hyperscalers rapidly acquired its graphics processing units. A spokesperson for Nvidia indicated that the funds raised will be allocated for general corporate purposes, including the repayment and refinancing of existing debts. In May, the company revealed an ambitious capital return program, increasing its dividend from one cent to 25 cents per share and announcing plans to repurchase $80 billion in shares. In its most recent earnings report, Nvidia reported generating $49 billion in free cash flow, a notable increase from $35 billion during the same period the previous year, and reaffirmed its commitment to return approximately 50% of free cash flow to shareholders this year.