Flush With Cash, Nvidia Still Borrows $25 Billion - Here's Why

Nvidia Corp. sold $25 billion in investment-grade bonds on Monday, June 16, in its first return to the corporate debt market since 2021, with investor orders reaching $85 billion, more than three times the offering size, as the chipmaker moves to lower its cost of capital and bankroll a deepening string of AI bets.

What Happened – Where, When, Why, & How

The deal, priced on June 15, was boosted from an initial target of $20 billion after demand from buyers far outpaced supply, according to a person with knowledge of the matter, reported The Edge Singapore. Notes were sold across seven tranches with maturities ranging from two to 30 years. The yield on the longest-dated portion tightened by 25 basis points to 65 basis points above US Treasuries as orders swelled.

The transaction was

structured without the investor roadshows standard practice before investment-grade sales – a format known in credit markets as a “drive-by.” Andy Li, analyst at CreditSights talking to Bloomberg, said the decision to pursue fast execution was unsurprising: “Nvidia holds a dominant position both in the market and financially, and doesn’t need to aggressively market itself to investors.” JPMorgan Chase, Goldman Sachs, and Morgan Stanley ran the book.

The Crucial Question – Why Debt, & Why Now

Nvidia reported $13.24 billion in cash and cash equivalents for the quarter ending April 2026. It also generated $49 billion in free cash flow in its latest quarter, up from $35 billion one year earlier. For the full fiscal year ending January 31, the company is expected to generate more than $200 billion in free cash flow, based on the average of analyst estimates.

A company that generates cash at that scale borrowing $25 billion raises an obvious question. The answer, according to Bloomberg Intelligence analyst Robert Schiffman, is weighted average cost of capital. A cheap, long-dated debt sale lowers Nvidia’s average cost of capital and supports the funding of strategic AI partnerships, including with OpenAI, without weakening its AA credit profile, Schiffman wrote in a note to clients.

The timing also worked in Nvidia’s favour. The announcement of a US-Iran framework deal to end the conflict in the Middle East steadied credit markets, pushing investment-grade spreads to their narrowest levels since early February, before the Iran war began, helping Nvidia lock in relatively cheap long-term financing. US high-grade bond funds have notched 13 straight months of inflows, according to LSEG Lipper data.

The Money Trail

Nvidia has taken a $5 billion stake in Intel, invested up to $10 billion in Anthropic, and bankrolled $30 billion in OpenAI’s March capital raise. The bond proceeds are earmarked for general corporate purposes, including refinancing existing debt, which is a standard use-of-proceeds clause; though Nvidia’s outstanding debt will rise from $8.5 billion to roughly $30 billion once the offering settles.

MarketWise says, the company aimed to create a liquid benchmark for its borrowing costs rather than directly finance major capital spending. Nvidia has not built data centres at the same scale as cloud service providers; it supplies the processors used in those facilities. That distinction matters for credit buyers: Nvidia’s bonds carry far less construction and project-execution risk than the data-centre debt issues from Alphabet or Amazon, where billions go into concrete, power contracts, and long-duration physical infrastructure.

The Broader Picture

Alphabet chose equity rather than debt financing, pricing an upsized $84.75 billion capital raise earlier this month, the largest equity capital raise ever recorded, to fund its AI computing expansion, with management guiding 2026 capital expenditure between $180 billion and $190 billion.

Morgan Stanley estimates hyperscalers will issue a collective $400 billion in bonds in 2026, up from $165 billion in 2025. Combined AI-related investment by major technology groups could exceed $700 billion in 2026, against roughly $400 billion in 2025, directed at chips, power systems, servers, and data centre construction.

Nvidia stock closed up 3.5 percent on June 15, 2026, at $212.45, giving the company a market capitalisation of approximately $5.14 trillion. Shares fell 2.37 percent the following session to $207.41 as broader semiconductor weakness added pressure, with the Nasdaq Composite declining 1.15 percent and the S&P 500 also lower.