Apollo Global Management is close to finalizing a loan of about $3.4 billion to an investment vehicle that plans to buy Nvidia chips and lease that computing hardware to Elon Musk’s xAI, a person familiar with the matter told a recent report. The financing could be wrapped up as soon as this week and is being arranged by Valor Equity Partners, which has been a long-standing investor in Musk-led businesses.
The potential loan comes days after Musk announced that SpaceX had acquired the artificial intelligence company he also leads in a transaction that values the rocket and satellite firm at $1 trillion and the AI company at $250 billion. Musk has said that one objective of bringing SpaceX and xAI together is to advance the concept of orbital data centers - using space-based infrastructure to support next-generation AI computing.
Industry estimates cited in the report indicate that big technology companies are expected to spend more than $600 billion this year on advanced chips and the data-center capacity necessary to train and deploy large AI systems. Leasing chips and compute infrastructure is a common approach for AI startups such as xAI to scale quickly while conserving capital that would otherwise be tied up in expensive hardware purchases.
If completed, the transaction would mark Apollo’s second sizeable investment in a vehicle that leases chips to xAI. In November, Apollo’s funds led a $3.5 billion financing for a roughly $5.4 billion data-center compute deal arranged by Valor to lease high-performance hardware to xAI. That November financing was structured as a triple-net lease intended to support one of the world’s largest compute clusters for AI model training and named Nvidia as an anchor investor in the vehicle.
According to the report, SpaceX, Apollo, Nvidia and xAI did not immediately respond to requests for comment. The recurring use of lease-backed financing illustrates one route investors and operators are using to field very large AI compute clusters without requiring startups to make outright hardware purchases.
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