SpaceX Locks Up $40 Billion for AI Chips as Musk Warns Most Neoclouds Will Die

SpaceX said it has closed a $40 billion financing deal to buy AI chips for its data centers. Elon Musk used the announcement to warn that lenders have almost entirely cut off money to companies that depend on AI data centers for their revenue.

The financing covers GPUs, the graphics processors that train and run AI models, for SpaceX, which absorbed xAI in February. According to a regulatory filing, an entity managed by Apollo Global Management, an investment firm that lends directly to companies instead of going through banks, will buy the chips and lease them to SpaceX.

Musk called it debt, but the filing describes a finance lease, a long-term rental that works like a loan. SpaceX would repay about $40 billion in principal through quarterly installments over roughly five years, plus interest at a fixed rate that has not been set. The chips arrive in batches, with leases starting in the first half of 2027.

“As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers,” Musk wrote on X. “SpaceX closed $40B of debt for GPUs, but we're investment grade and have Starlink & launch revenue.”

Investment grade is a credit rating telling lenders a borrower is unlikely to miss payments, and Moody's rated SpaceX Baa1, an investment-grade level, in June. Starlink is SpaceX's satellite internet business, and both it and the rocket launches bring in revenue that has nothing to do with AI.

“That means the 200+ neoclouds are going to see guppy-level death and consolidation,” Musk added. “Some will make it through, but not many.”

Neoclouds are specialist companies that rent out GPU capacity to AI developers. The largest, CoreWeave, began in 2017 by mining Ethereum with graphics cards before pivoting to AI after the network retired mining in 2022.

CoreWeave's shares fell about 30% between September 30 and October 16, from $87 to $61, and the company carries roughly $50 billion in debt. Its unsecured bonds, meaning loans with no specific assets pledged as backup, yielded about 15% in mid-October, so investors demanded roughly 15% a year to lend to it.

The weakness is that chips lose value fast while the loans last for years. CoreWeave booked nearly $1.4 billion in depreciation and amortization, the accounting charge for hardware wearing out, in the second quarter against about $2.6 billion in revenue.

Ken Griffin, founder of Citadel, told the firm's markets conference on October 20 that GPUs resemble airline seats as both cost almost nothing to add once they exist, so prices can collapse when supply outruns demand.

Venture capitalist and entrepreneur Chamath Palihapitiya expects more AI computing power to sit idle in 2027 than forecasts assume. “There are delays in the existing pipeline that will catch people off guard in 2027,” he wrote on X. “Hyperscalers will (obviously) react by focusing on their own internal compute needs over any third party.”

Hyperscalers are the cloud giants such as Amazon, Microsoft, and Google. Palihapitiya said the stranded hardware is bought and paid for but earns less than it costs to finance, a problem he said holds across the industry with one exception he did not name.

“2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets,” Palihapitiya wrote. “It will also be a consolidation year for a few.”

SpaceX said it expects to finalize the master finance lease before the end of 2026, and the interest rate on the roughly $40 billion in leases has yet to be determined.