Apollo Global Management is closing on a $3.4 billion loan for an investment vehicle that plans to buy Nvidia’s AI chips and lease them to Elon Musk’s artificial intelligence company xAI.
This is according to a person familiar with the deal who spoke to The Information. The deal could be finalized this week. Valor Equity Partners, one of Elon’s longtime backers, is putting it all together.
This is not Apollo’s first chip rental agreement with xAI. Back in November, Apollo provided $3.5 billion in financing for a similar lease structure. The deal was part of a larger $5.4 billion data center computing deal arranged by Valor.
Similarly, the company is designed to supply xAI with high-performance chips and infrastructure without having to pay upfront.
The hardware will be leased in a triple-net structure, so maintenance costs, taxes, and insurance will be covered by xAI. The goal is to build one of the largest AI model training clusters on the planet.
Nvidia itself is also involved in the financing vehicle. Chipmakers act as anchor investors, betting on demand for their products through this leasing model. This setup allows xAI to scale quickly while limiting the amount of cache put into the hardware itself.
Apollo reports recording capital inflows and fee increases
Meanwhile, Apollo’s Q4 2025 results were also released today, with the company beating Street expectations, delivering nearly $30 billion in net inflows and a new record total of $938 billion in assets under management.
It wasn’t just the influx. Apollo also said it had a record quarter for capital deployment, which led to higher fees charged to customers.
Fee-related revenue rose 25% year over year to $690 million, as management fees surged 27% and fees from deal origination and syndication through the capital markets division rose 41%, according to analysts surveyed by Visible Alpha.
“Apollo’s fourth quarter results cap off a year of exceptional execution,” CEO Mark Rowan said in a statement. He added that the company is making progress on multiple fronts, including financing infrastructure, expanding its retirement solutions and providing private market access to more buyers.
However, not all the numbers were pretty. Net income fell 55% to $660 million, or $1.07 per share, less than expected. Nevertheless, Apollo’s board approved a $4 billion share buyback, expressing confidence in its long-term prospects.
Concerns that AI could hit private credit as investors abandon asset managers
The rest of the private credit market didn’t have a great week as Apollo doubled down on its chip leases to xAI. Shares of major asset managers took a hit, with Ares Management down more than 12%, Blue Owl Capital down 8% and KKR down nearly 10%.
TPG fell 7%, while Apollo and BlackRock fell more than 1% and 5%, respectively. The S&P 500 was barely budging, down just 0.1%, while the Nasdaq was down 1.8%.
Why the crash? Investors are starting to panic about how AI could change the landscape for borrowers. When a software company goes bankrupt, cash flow becomes tighter and the risk of default increases, especially if the acquisition is backed by opaque and illiquid financing.
Mark Zandi, chief economist at Moody Analytics, said the sector’s secretiveness makes it difficult to fully understand the risks. Still, he warned that the combination of rapid growth in AI-related borrowing, increased leverage and lack of transparency are flashing major “yellow lights.” His words:
“Significant credit problems are bound to occur, and while the private credit industry is probably able to absorb losses fairly well at the moment, that may not be the case in a year’s time if current credit growth continues.”
Meanwhile, Apollo’s Athens insurance unit generated $34 billion in pension inflows in 2025, with $7.3 billion inflows in the fourth quarter. This is down slightly from $36 billion in 2024. Therefore, retail demand may be cooling at the same time as risk levels are rising.
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