The NVIDIA case is such a strange example to use to make the argument the author is trying to make.

NVIDIA raised $25 billion and had $85 billion in orders. Because of the demand, it was able to upsize its offering and issue bonds in maturities ranging from 2 to 30 years at quite favorable interest rates. The amount raised is a quarter of a year's free cash flow and the spread tightened during the book building process, so bond investors obviously aren't on the same page as the author.

You really can't make a bearish argument about the amounts being raised without putting the numbers in perspective. Yes, the issuances are big, but the equity and cashflows are also big, so the amounts being raised in the bond market don't really align to the author's skepticism when it comes to NVIDIA, Google, Meta.

The author would have a stronger case with Oracle but that alone wouldn't support the "Big Tech" story line.

Edit: $25 billion is a quarter's worth of free cash flow for NVIDIA, not half a year's as I originally stated.

▲

krupan 2 hours ago | parent [-]

What are you assuming the author case is? The article points out that by normal logic these companies are overvalued and so owning their stock is risky. Now that they've taken on all this debt, it's even riskier.

▲

ElProlactin 2 hours ago | parent [-]

The words "valuation" and "overvalued" appear exactly 0 times in the post. The author didn't make the argument you're claiming.

Actually I misspoke in my original comment. NVIDIA has about $100 billion/year of free cash flow. So $25 billion is a quarter's free cash flow, not a half a year's.

$25 billion of debt against a $5+ trillion equity value and ~$100 billion of annual free cash flow barely moves the needle on equity beta or default risk.

	▲	krupan 44 minutes ago \| parent [-]
		[dead]