Apollo Global Management is finalizing a roughly $3.4 billion loan to an investment vehicle that will purchase Nvidia chips and lease them to Elon Musk's artificial intelligence startup xAI, according to multiple sources familiar with the deal, marking the private equity giant's second major investment in AI chip leasing infrastructure.
The transaction, which could be completed as early as this week, represents one of the largest financing deals in the rapidly growing AI infrastructure sector and highlights the massive capital requirements facing companies racing to build next-generation artificial intelligence systems.
Valor Equity Partners Orchestrates the Deal
Valor Equity Partners, a longtime investor in Musk's various enterprises including SpaceX and Tesla, is arranging the complex financing structure. The Chicago-based investment firm has emerged as a key player in facilitating the capital-intensive infrastructure buildouts required for advanced AI model training and deployment.
The deal follows Apollo's previous $3.5 billion loan made in November for a similar xAI chip leasing arrangement, suggesting a strategic partnership between the private equity firm and Musk's AI ambitions. Apollo announced just days ago that its funds led $3.5 billion in financing for a roughly $5.4 billion data-center compute deal also arranged by Valor Equity Partners.
Strategic Context: SpaceX-xAI Mega-Merger
The financing comes less than a week after Musk announced a groundbreaking merger between SpaceX and xAI in a deal that values the rocket and satellite company at $1 trillion and the AI startup at $250 billion. This combination creates one of the most valuable corporate entities in history and positions Musk to pursue ambitious projects including orbital data centers.
According to Musk, the rationale behind combining SpaceX and xAI is partly to advance the development of space-based data centers, which could use orbital infrastructure to support next-generation AI computing. Such facilities could offer advantages including reduced latency for global communications and access to unlimited solar power.
"The convergence of space infrastructure and AI computing represents a paradigm shift that could redefine both industries," said one technology analyst who requested anonymity due to company policies.
The $600 Billion AI Infrastructure Boom
The Apollo-xAI deal reflects broader trends in the technology sector, where companies are expected to spend more than $600 billion this year purchasing advanced semiconductors and constructing massive data centers needed for AI systems. This represents one of the largest capital expenditure cycles in modern business history.
Nvidia has emerged as the primary beneficiary of this spending surge, with its advanced AI chips commanding premium prices and facing supply constraints. The company's graphics processing units (GPUs) have become essential infrastructure for companies developing large language models and other AI applications.
Chip Leasing Model Gains Traction
The leasing arrangement allows AI startups like xAI to rapidly scale their computing capabilities while preserving capital that would otherwise be tied up in expensive hardware purchases. This financial structure has become increasingly popular as AI companies seek to balance growth ambitions with capital efficiency.
For Apollo, the deals represent attractive opportunities to deploy capital in infrastructure assets with stable cash flows backed by creditworthy counterparties. The private equity firm has been actively investing in technology infrastructure as traditional private equity opportunities become more competitive.
Triple-Net Lease Structure
The financing is structured as a triple-net lease to support one of the world's largest compute clusters for AI model training. This arrangement typically provides predictable returns for investors while allowing the operating company to access cutting-edge infrastructure without large upfront capital commitments.
Nvidia is also participating as an anchor investor in the vehicle, creating an interesting alignment where the chip manufacturer has a financial stake in its own products' utilization. This structure could help ensure optimal deployment and utilization of the expensive hardware.
Competitive Landscape and Market Implications
The deal positions xAI to compete more effectively with established AI leaders including OpenAI, Google's DeepMind, and Anthropic. Access to massive computing resources has become a critical competitive advantage in the race to develop more capable AI systems.
Other technology companies are pursuing similar strategies, with Microsoft, Amazon, and Google all announcing major infrastructure investments to support their AI initiatives. The scale of capital deployment across the industry suggests AI computing infrastructure may be entering a period of rapid expansion similar to the early days of cloud computing.
Regulatory and Strategic Considerations
The transaction also highlights the growing importance of AI infrastructure in national competitiveness discussions. U.S. policymakers have expressed concerns about ensuring domestic companies maintain access to advanced AI capabilities while preventing potential adversaries from accessing critical technologies.
For Musk, the financing deals provide the computational firepower needed to advance xAI's goal of developing AI systems that can understand and interact with the physical world. The company has positioned itself as pursuing "truth-seeking" AI that can provide unbiased analysis of complex topics.
Published: February 10, 2026 at 3:38 PM UTC
Sources: Reuters, The Information, Company Reports