Apollo Global Management is close to finalising a roughly $3.4 billion loan to an investment vehicle that plans to purchase Nvidia chips and lease them to Elon Musk-led artificial intelligence company xAI, according to a report by The Information citing a person familiar with the matter.
The deal could be completed as soon as this week, with Valor Equity Partners, a longtime backer of Musk’s ventures, arranging the transaction.
The financing reflects how Wall Street is increasingly structuring bespoke vehicles to fund the explosive demand for AI compute infrastructure, as companies race to secure scarce high-performance chips and data centre capacity.
Financing model reshapes AI infrastructure funding
Leasing chips and compute infrastructure has emerged as a crucial mechanism for AI companies seeking to scale rapidly without tying up capital in costly hardware purchases.
For xAI, the model offers a way to expand its computing footprint while continuing to invest heavily in talent, software and data centres.
If completed, the transaction would mark Apollo’s second major investment in a chip-leasing vehicle tied to xAI.
In November, Apollo-backed funds provided a similar $3.5 billion loan.
Over the weekend, Apollo also said its funds led $3.5 billion in financing for a roughly $5.4 billion data-centre compute deal arranged by Valor, structured as a triple-net lease and backed by Nvidia as an anchor investor.
Apollo estimates that global data centre infrastructure will require several trillion dollars of investment over the next decade, driven by accelerating demand for AI workloads.
Since 2022, Apollo-managed funds and affiliates have deployed more than $40 billion into next-generation infrastructure spanning compute capacity, digital platforms and renewable energy.
Musk’s broader AI and space strategy
The financing discussions come shortly after Musk announced that SpaceX had acquired xAI in a deal valuing the rocket company at $1 trillion and the AI firm at $250 billion.
Musk has said the rationale behind combining the two entities is partly to advance the development of orbital data centres, which could use space-based infrastructure to support next-generation AI computing.
Big technology companies are expected to spend more than $600 billion this year on advanced chips and data centres, underscoring the scale of capital required to compete in the AI race.
xAI has tapped Wall Street, sovereign investors and venture capital firms for billions of dollars over the past year.
It recently announced a $20 billion investment in Mississippi and raised another $20 billion in equity from investors, including Nvidia, Valor and the Qatar Investment Authority.
As xAI continues to burn cash on infrastructure and talent, analysts expect the company to rely increasingly on special purpose vehicles and structured financing to sustain its rapid expansion.
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