PE giant Apollo provides $3 billion in financing to purchase Nvidia chips for leasing to xAI.

```

Apollo Global Management is extending its private credit reach into AI computing assets, providing cash flow buffers for high-capital expenditure projects like xAI through a “buy the chips, then lease them” structured financing, and opening a hardware-backed return pathway for investors.

According to The Information citing sources, Apollo is close to arranging a loan of about $3.4 billion, with funds earmarked for an investment vehicle that plans to purchase Nvidia chips and lease them to Elon Musk’s xAI, with the deal possibly finalized as soon as this week.

This will be Apollo’s second large-scale support for a chip leasing vehicle aimed at xAI. Last November, Apollo provided a similar $3.5 billion loan. Sources say Apollo also plans to invest in the equity of the new vehicle, which aims to raise a total of about $5.3 billion in equity and debt funds.

Valor Equity Partners is orchestrating this deal. This chip vehicle is part of Valor’s larger fundraising move, with Valor aiming to raise $20 billion in debt and equity for AI chips to be installed in xAI data centers.

xAI monthly cash burn exceeds $1 billion; heavy asset expansion is driving up financing needs

The Information, citing financial documents, reports that in the first nine months of 2025, xAI spent $7.8 billion on real estate and equipment to build large-scale data centers for its Grok series models.

By the fall of 2025, xAI’s monthly cash burn will exceed $1 billion. In the same period, xAI recorded nearly $210 million in revenue.

Against this backdrop, purchasing chips through vehicles and leasing them allows part of the one-off capital expenditure to be converted into ongoing rental costs, easing short-term cash pressure.

Musk has not encountered major obstacles raising funds for xAI. The Information notes the company announced last month it had raised $20 billion in a separate financing round, $5 billion more than initially expected.

Sources say, Apollo’s approval for the deal came before Musk decided to merge xAI with SpaceX.

Return assumptions: baseline scenario annualized return exceeds 22%, downside scenario around 17%

The debt Apollo is providing to the investment vehicle is expected to carry a 9.5% interest rate. Sources say Apollo also plans to sell part of the debt to other institutions and help sell the equity portion of the vehicle.

In pitch materials to equity investors, Valor forecasts that if the vehicle sells the chips and data center equipment at one-quarter of their purchase price after five years—which Valor calls the “baseline scenario”—investors can earn an annual return of over 22%.

Even in the “adverse scenario,” investors can earn nearly 17% annual return. This scenario assumes the chips are sold to refineries for their raw material value (including gold and copper). If xAI renews the lease for three more years at a 60%–70% discount, investors can achieve similar returns.

Apollo’s calculus: accelerating investment in AI chips and data center financing

Apollo, which manages over $900 billion in assets, is accelerating its financing for AI chips and data centers. Last year, Apollo acquired Stream Data Centers in Texas and is exploring using funds from its life insurance business to invest in major tech companies’ computing facilities.

The Information also notes that Apollo often steps in when companies face cash difficulties, typically seeking higher returns and setting strict risk protection clauses. This chip vehicle financing related to xAI continues its private credit strategy of risk-based pricing for yield.

Risk warning and disclaimerThe market carries risks, and investors need to be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular situation. Investments made accordingly are at your own risk. ```