Nvidia, Oracle and SpaceX to borrow billions of dollars for AI investment

Major technology companies including Nvidia, Oracle and SpaceX are raising external funds to invest in artificial intelligence-related infrastructure. From an investor’s perspective, it is important to note that companies’ ability to manage debt varies considerably.

Nvidia, Amazon and Alphabet are classified as companies capable of taking on additional borrowing because of their strong operating cash flow. Reports point to these companies’ ability to repay debt with cash.

Meanwhile, SpaceX is considering issuing bonds worth 200billion dollars. Reports say the company has recorded persistent losses and negative free cash flow.

Oracle also appears to be expanding its borrowing in line with its AI investment. The specific issuance size varies by company.

The report emphasizes the difference between highly profitable companies and companies with high cash burn. Companies that burn through large amounts of cash may be vulnerable to changes in market conditions.

Investors need to closely examine the size and terms of bond issuances, as well as companies’ recent quarterly cash flow disclosures. They should check the figures announced immediately and future financing plans.