Joining Amazon and Alphabet, Nvidia announced that it is tapping the debt market with a $25 billion bond issue.
- Nvidia shares have gained 6% in the last three sessions.
- Following the bond issue announcement, Stocktwits sentiment for NVDA dropped to ‘extremely bearish’ from ‘bearish.’
- The U.S. and Iran announced a peace deal, triggering gains in global markets on Monday.
Nvidia Corp.’s stock jumped 3.5% on Monday, marking its best session in more than two weeks and lifting the AI chip giant’s market capitalization back above the $5 trillion mark. The stock, however, fell 0.6% in overnight trading after the company announced a debt raise.
The gain came after the U.S. and Iran announced a peace deal on Sunday, a major breakthrough after nearly four months of fighting that created global political and economic turmoil.
NVDA stock has gained about 6% over the last three sessions. Although shares remain roughly 10% below their mid-May all-time high, the rebound is encouraging for investors, as Nvidia has significantly underperformed several peers in the chip sector in recent months.
NVDA Announces $25B Bond Sale
Meanwhile, Nvidia said late Monday that it plans to raise $25 billion through a U.S. bond offering, with several tranches of notes maturing as far out as 2056.
The announcement marks the AI chip giant’s first trip to the debt markets since 2021, when it raised $5 billion in debt, and follows a wave of large debt issuances by tech companies such as Amazon and Alphabet to help finance massive AI infrastructure investments.
Nvidia said it aims to use the proceeds for general corporate purposes, including the repayment and refinancing of outstanding notes, a company spokesperson told Reuters.
Reuters reported, citing sources, that the main reason for the issue is to establish a liquid benchmark to its cost of credit, and that the sale received $85 billion in bids, prompting Nvidia to raise the bond offering from the $20 billion it had initially planned.
Still, retail traders remain bearish on NVDA. On Stocktwits, the retail sentiment for NVDA dropped to ‘extremely bearish’ on Monday night, from ‘bearish’ the previous day, even as 24-hour message volume surged over 400%.
Traders believe NVDA does not offer the upside seen in peers Intel, AMD, and memory stocks, but its long-term position remains strong.
Retail View On NVDA Remains Dim
“$NVDA It won't crash the way some stocks with meme-like, FOMO-driven fantasy valuations will. Congrats to everyone making money on AI hype stocks, but I'd have trouble holding most of them for much longer,” a trader wrote. “Keeping NVIDIA is almost like owning an ETF. It's a solid investment you can sleep well with.”
Another wrote: “$NVDA so it closed strong and no sell off for a third consecutive day! Thats a good sign.”
NVDA stock is up 14% year to date, compared to the 109% gains in the iShares Semiconductor ETF (SOXX) and 20% in the Invesco QQQ Trust Series 1 (QQQ).
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