Nvidia has disclosed that it owns nearly 123 million shares in SpaceX, further highlighting the chipmaker’s entangled financial relationships with some of its biggest customers. Because who needs simple vendor-client relationships when you can have a financial labyrinth?
The $5.5 trillion company owned SpaceX stock worth nearly $21 billion at the end of June, according to an SEC filing on Friday. Elon Musk’s rocket conglomerate’s shares have fallen sharply since its June initial public offering, meaning Nvidia’s stake would now be worth $17 billion. Ah, the joys of market volatility - especially when you're betting on a company that also builds rockets.
The disclosure marks a huge pay-off on Nvidia’s investment in xAI, completed in January, shortly before Musk combined the AI lab with SpaceX. Because what's a little corporate restructuring between friends?
It underscores the scale of Nvidia chief Jensen Huang’s effort to use the financial power of the world’s most valuable company to forge complex and often circular financial links across the AI industry, including with some of his largest customers. It's like a financial game of Twister, but with chips and rockets.
Nvidia did not immediately respond to a request for comment. Probably too busy counting their billions.
Musk, during SpaceX’s first public earnings call last week, said the company had an exclusive relationship with Nvidia to kit out its data centers.
“We’ve decided to build exclusively on Nvidia because we think [its] Vera Rubin architecture is the best architecture,” he said. “We think it’s the best AI computer and we greatly value our close co-operation and partnership on many levels with Nvidia.”
Translation: We're in a committed relationship, and it's exclusive. Nvidia, meanwhile, has committed more than $100 billion to AI companies in the past two years, with sizeable investments in cloud computing start-ups such as CoreWeave and AI labs including Thinking Machines and Safe Superintelligence. Because when you're the richest chipmaker, you buy friends.
It has also invested in Cursor, the code-editing start-up that SpaceX acquired for $60 billion this week. Yes, a code editor for $60 billion - because why not?
This week, Nvidia disclosed plans to put together more than $500 billion from a consortium of investors, including Apollo Global, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs, and KKR to help finance its customers. Nvidia plans to partially guarantee loans from the Wall Street investors that are backed by the value of its chips. It's like a high-stakes game of Monopoly, but with real money and AI chips.
Nvidia’s largesse has helped accelerate the building of AI infrastructure and binds parts of the industry more tightly to the chipmaker’s technology. Because nothing says 'loyalty' like being financially indebted to your supplier.
SpaceX is planning to increase its computing capacity from 2 gigawatts at the end of this year to “closer to 10GW [than 5GW]” by the end of 2027, Musk told investors last week. That's a lot of juice for a rocket company.
The rocket maker’s IPO handed huge returns to its early backers. Google owns roughly 7 percent of the rocket maker, according to FactSet data, having originally invested $900 million in 2015. The search giant told investors in July that its stake was valued at about $94 billion. Because sometimes, betting on rockets actually pays off.