Nvidia kicks off first corporate bond offering in 5 years, targets $20 billion raise

Chipmaking giant Nvidia Corp. plans to sell at least $20 billion in bonds on Monday, joining a wave of companies borrowing money to pay for investments in the artificial intelligence boom.

The size of the offer could still be increased, according to sources with knowledge of the matter. Nvidia is selling it in seven pieces with maturities ranging from 2 to 30 years, according to another person with knowledge of the matter.

The yield on the longest portion was initially mooted as about 0.9 percent higher than Treasuries, said the person, who asked not to be identified because he was not authorized to speak publicly. Proceeds from the sale will be used to refinance outstanding debt, among other uses, the person said.

The bonds would be the first debt Nvidia has sold in five years. The sale is expected to be at least four times larger than the previous two offerings in 2020 and 2021.

Alphabet Inc. and Amazon.com Inc. Companies like are flooding debt markets with hundreds of billions of dollars in bond sales as they build the data centers and other infrastructure needed for AI to grow rapidly. Investors have absorbed the supply easily so far.

Nvidia often becomes the supplier of these projects, and in the process becomes the cornerstone of the artificial intelligence ecosystem and also the largest company in the world in terms of market value. It is spending heavily to support an ecosystem of companies that will help grow demand for artificial intelligence. Last year it decided to buy a $5 billion stake in chipmaker Intel Corp. and invest up to $10 billion in model maker Anthropic PBC. The company has agreed to contribute $30 billion to a major funding round for OpenAI, the company announced in February. It also increases payouts to shareholders.

Like many major tech companies, Nvidia is reaping huge profits and cash flow from the AI ​​boom. The company is expected to generate more than $200 billion in free cash flow in the fiscal year ending Jan. 31, according to an average of analyst estimates compiled by Bloomberg.

A sale of relatively cheap, long-term debt could help Nvidia lower its average cost of capital and raise financing for strategic AI partnerships, including OpenAI, without weakening its AA credit profile, Bloomberg Intelligence analyst Robert Schiffman wrote in a note to clients.

JPMorgan Chase & Co. is among the banks that made the offering. Representatives for and Morgan Stanley declined to comment. Goldman Sachs Group Inc., which also managed the bond sale. did not respond to requests for comment. An Nvidia spokesperson referred requests for comment on the company’s filing on the proposal.