Apollo Nears $3.4 Billion Loan Deal to Fund Nvidia AI Chips for Elon Musk’s xAI

• Why is Apollo doubling down on AI chip financing?
• How did Apollo perform financially in Q4 2025?
• What’s worrying private credit investors about AI?
• How does xAI benefit from this chip leasing model?
• Are retail investors cooling on Apollo’s annuity products?
• FAQ: Your Burning Questions Answered

Apollo Global Management is finalizing a $3.4 billion loan to finance Nvidia AI chips for Elon Musk’s xAI, marking another high-stakes bet on AI infrastructure. Meanwhile, Apollo’s Q4 2025 earnings smashed expectations with $30 billion in net inflows, though private credit markets wobble amid AI disruption fears. Here’s the full breakdown.

Why is Apollo doubling down on AI chip financing?

Apollo Global Management is closing in on a $3.4 billion loan to an investment vehicle that will purchase Nvidia’s cutting-edge AI processors and lease them to xAI, Elon Musk’s artificial intelligence venture. This follows a similar $3.5 billion deal in November 2025, part of a broader $5.4 billion data center transaction orchestrated by Valor Equity Partners, Musk’s longtime investment ally. The triple-net lease structure shifts maintenance, taxes, and insurance costs to xAI while allowing rapid scaling without heavy upfront capital. Nvidia itself is anchoring the financing, betting on sustained demand for its hardware through this innovative leasing model.

How did Apollo perform financially in Q4 2025?

Apollo reported record-breaking results today, attracting nearly $30 billion in net inflows—pushing assets under management to $938 billion. Fee-related earnings jumped 25% year-over-year to $690 million, driven by a 27% surge in management fees and 41% growth in capital markets origination fees. "This quarter capped a year of exceptional execution," CEO Marc Rowan noted, highlighting expansions in infrastructure financing and retirement solutions. However, net income fell 55% to $660 million ($1.07/share), missing estimates. Undeterred, Apollo announced a $4 billion stock buyback, signaling confidence in long-term prospects.

What’s worrying private credit investors about AI?

While Apollo thrives, the broader private credit sector had a brutal week. Shares of major asset managers plummeted: Ares Management (-12%), Blue Owl Capital (-8%), KKR (-10%), TPG (-7%), and BlackRock (-5%) all tumbled as the Nasdaq dropped 1.8%. The culprit? Growing panic that AI disruption could squeeze cash flows for traditional borrowers. Moody’s Mark Zandi warned: "Rising AI-linked leverage and opaque lending practices are red flags. The sector may absorb losses now, but if credit growth continues unchecked, trouble could brew by 2027."

How does xAI benefit from this chip leasing model?

This deal lets xAI access Nvidia’s coveted H100/H200 GPUs without draining cash reserves—critical for training massive AI models. The November 2025 transaction already positioned xAI to build one of Earth’s largest AI training clusters. With Nvidia as both supplier and financier, Musk’s company sidesteps the chip shortage crunch while competitors scramble for inventory. As one BTCC analyst observed: "It’s like leasing a Ferrari instead of buying it—you get the performance without the garage headaches."

Are retail investors cooling on Apollo’s annuity products?

Apollo’s insurance arm Athene pulled in $34 billion in 2025 annuity inflows ($7.3B in Q4), though this dipped slightly from 2024’s $36 billion. The slowdown coincides with rising risk appetites in AI—a trend worth watching as credit markets tighten. "Retail investors might be sensing the storm clouds," remarked a TradingView analyst, pointing to Athene’s shrinking margins.

FAQ: Your Burning Questions Answered

What’s unique about Apollo’s chip leasing structure?

The triple-net lease transfers operational costs to xAI while Apollo retains ownership. Nvidia’s participation as an anchor investor adds credibility, creating a win-win for suppliers and lessees.

How risky is private credit exposure to AI disruption?

Very. Moody’s warns that opaque loans to AI-vulnerable businesses could trigger defaults if cash flows dry up. Private lenders’ limited transparency exacerbates the risk.

Why did Apollo’s net income drop despite record inflows?

One-time charges and higher operational costs bit into profits. The $4 billion buyback suggests management views this as temporary.