SpaceX Locks Up $40 Billion for AI Chips as Musk Warns Most Neoclouds Will Die

The financing covers GPUs, the graphics processors that train and run AI models, for SpaceX, which absorbed xAI in February. According to a regulatory filing, an entity managed by Apollo Global Management will buy the chips and lease them to SpaceX.

Musk called it debt, but the filing describes a finance lease, a long-term rental that works like a loan. SpaceX would repay about $40 billion in principal through quarterly installments over roughly five years, plus interest at a fixed rate that has not been set.

Neocloud collapse predicted

Musk warned that lenders have almost entirely cut off money to companies that depend on AI data centers for their revenue. "That means the 200+ neoclouds are going to see guppy-level death and consolidation," he added. "Some will make it through, but not many."

Neoclouds are specialist companies that rent out GPU capacity to AI developers. The largest, CoreWeave, began in 2017 by mining Ethereum with graphics cards before pivoting to AI after the network retired mining in 2022.

CoreWeave's shares fell about 30% between September 30 and October 16, from $87 to $61, and the company carries roughly $50 billion in debt. Its unsecured bonds yielded about 15% in mid-October, indicating investor concerns.

Market turbulence ahead

Investor Chamath Palihapitiya forecast a turbulent 2027 with more idle or underused AI computing power than expected. "There are delays in the existing pipeline that will catch people off guard in 2027," he wrote on X.

Ken Griffin, founder of Citadel, told the firm's markets conference that GPUs resemble airline seats as both cost almost nothing to add once they exist, so prices can collapse when supply outruns demand.

SpaceX said it expects to finalize the master finance lease before the end of 2026, and the interest rate on the roughly $40 billion in leases has yet to be determined.