Ives rates SpaceX (SPCX.US) as "outperform" with a target price of $225: Bond issuance secures Nvidia chips to strengthen the AI flywheel

According to Golden Ten Data, investment firm Yorkville Ives stated that SpaceX (SPCX.US) may raise $40 billion in debt to purchase Nvidia (NVDA.US) chips, a move that is described as a "wise strategic step" for the Musk-led company.

Yorkville Ives analyst Dan Ives wrote in a client report released on Wednesday: "We believe this is a wise strategic step for SpaceX's expansion, as it will reinforce the flywheel effect between launches, Starlink, and AI: each business reduces costs or increases demand for the other two, and the AI sector represents the next stage of growth—with contracted cloud capacity translating into revenue."

Ives gave SpaceX an "outperform" rating with a target price of $225.

Reportedly, SpaceX is seeking to raise $40 billion in a financing round led by Apollo Global Management (APO), intended to purchase Nvidia chips. The company plans to raise around $10 billion through bank loans and $30 billion in investment-grade debt to fund this major chip order.

Apollo is expected to lead the transaction and assist in selling this debt to a broad investor base. Bond giant Pacific Investment Management Company (Pimco) is one of the few lending institutions involved in the financing negotiations. The deal is expected to be completed in 2027.

Ives further analyzed that Musk and SpaceX clearly need to act quickly. Given the speed and scale of SpaceX's imminent cloud data center AI build-out, he believes this funding will receive a "strong response" from investors.

He added: "The constraint in this sector is supply, not demand, so the question remains how quickly SpaceX can bring computing power online and how to pay for it. Locking in Nvidia chip supply with debt instead of equity is a more capital-efficient answer: it avoids returning to the equity market just four months after the June IPO to fund pre-contracted capacity, and enables revenue generation as soon as power is switched on, turning bottlenecks into on-schedule construction."