Ives rates SpaceX (SPCX.US) "Outperform" with a $225 price target: Bond issuance to lock in NVIDIA Corporation chips can strengthen the AI flywheel.

Investment firm Yorkville Ives stated that SpaceX (SPCX.US) could raise $40 billion in debt to purchase NVIDIA Corporation (NVDA.US) chips, calling it a "smart strategic move" for the Musk-led company. Yorkville Ives analyst Dan Ives wrote in a client note released Wednesday: "We believe this is a smart strategic move for SpaceX's expansion, as it will strengthen the flywheel effect between launch, Starlink, and AI: each business is reducing the cost or expanding the demand of the other two, and the AI segment is where the next phase of growth lies contracted cloud capacity will convert into revenue." Ives rates SpaceX "Outperform" with a $225 price target. According to reports, SpaceX is seeking to raise $40 billion in a funding round led by Apollo Global Management Inc (APO) to purchase NVIDIA Corporation chips. The company plans to raise approximately $10 billion in bank loans and $30 billion in investment-grade debt to fund this massive chip order. Apollo is expected to lead the deal and assist in selling the debt to a broad group of investors. Bond giant The Pacific Investment Management Company (Pimco) is one of the few lenders participating in the financing negotiations. The transaction is expected to close in 2027. Ives further analyzed that Musk and SpaceX clearly need to move quickly, and given the speed and scale of SpaceX's upcoming cloud data center AI buildout, he believes this financing will receive a "favorable response" from investors. He added: "The constraint in this sector is supply, not demand, so the question has always been how quickly SpaceX can bring computing power online and how to pay for it. Locking in NVIDIA Corporation chip supply with debt rather than equity is the more capital-efficient answer: it avoids returning to the equity market just four months after the June IPO, funds capacity that has already been contracted before delivery, and can begin generating revenue immediately upon energization, thereby converting the bottleneck into a buildout that stays on schedule."