Elon Musk stated that SpaceX has completed a $40 billion debt financing arrangement to fund the chips required for its artificial intelligence goals.

Musk wrote in a post on X that SpaceX secured the debt raise to purchase Nvidia Corp.'s graphics processing units, or GPUs, citing the company's investment-grade credit ratings and revenue generated from its Starlink satellite operations and rocket launches. He described the transaction as an off-balance-sheet deal.

Nevertheless, individuals with knowledge of the situation indicated that the parties were still negotiating pricing as of Sunday and that the deal had not been finalized.

By emphasizing SpaceX's diversified business operations, Musk aimed to set the company apart from so-called neoclouds that provide high-end computing power to technology firms. These companies have faced intense scrutiny over the past two weeks regarding their substantial borrowing and demand outlook.

"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 said in his post. "The 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many." He subsequently stated that SpaceX will not acquire any neoclouds, describing it as "pointless."

SpaceX has not been entirely insulated from the mounting concerns surrounding the AI infrastructure boom. Discussions regarding the final pricing for its off-balance-sheet structure for $40 billion in chip financing became entangled in the recent neocloud market turbulence, Bloomberg reported Friday.

Bankers led by Goldman Sachs Group Inc. had been discussing the structure with investors led by Apollo Global Management Inc., with Apollo-backed Atlas SP slated to manage the entity, according to people familiar with the matter who requested anonymity to discuss private information. Pacific Investment Management Co. had also considered investing, according to those individuals. The debt was expected to be issued in the form of private placements called 144a, the people said.

With the latest structure, SpaceX would avoid repeating a financing attempt last year by Musk's AI startup, xAI. In that transaction, an entity sought as much as $20 billion of off-balance-sheet debt through a sale-leaseback agreement with Valor Equity Partners. However, SpaceX ultimately had to record approximately $13 billion of that debt after it was declared a "failed sale-leaseback arrangement," according to SpaceX's latest earnings report.

The debt raise follows strong third quarter earnings, with SpaceX's AI unit turning a profit for the first time. The enterprise is increasingly driving revenue by selling computing power from its Memphis data centers to external AI labs and hyperscalers.

During SpaceX's earnings call, Chief Financial Officer Bret Johnsen indicated that the company was in discussions with lenders over further borrowing.

"We have a lot of conviction that we are going to be able to do this in a very measured fashion and continue to keep ourselves in that IG status along the way," he said, pointing at the firm's investment-grade rating.