Apollo Global Management is on the verge of finalizing a $3.4 billion loan for an investment vehicle that plans to buy Nvidia AI chips and lease them to xAI, Elon Musk’s artificial intelligence company.
That’s according to a person familiar with the deal, who allegedly spoke to The Information. The agreement could be wrapped up this week. Valor Equity Partners, one of Elon’s long-time backers, is putting the whole thing together.
This wouldn’t be Apollo’s first chip-for-rent arrangement with xAI. Back in November, Apollo provided a $3.5 billion loan to a similar leasing structure. That deal was part of a larger $5.4 billion data center compute transaction arranged by Valor.
Just like this one, it was designed to supply xAI with high-powered chips and infrastructure, without the company having to pay upfront.
The hardware will be leased under a triple-net structure, which makes xAI responsible for upkeep, taxes, and insurance. The goal is to build out one of the biggest AI model training clusters on Earth.
Even Nvidia itself is involved in the financing vehicle. The chipmaker is acting as an anchor investor, betting on demand for its own products through this leasing model. The setup lets xAI expand quickly, while limiting how much cash it has to sink into the hardware itself.
Apollo reports record capital inflows and growing fees
Meanwhile, Apollo’s Q4 2025 earnings were released today too, and the company beat the Street’s forecasts, pulling in nearly $30 billion in net inflows, boosting its total assets under management to $938 billion, a new record.
It wasn’t just inflows. Apollo said it also had a record quarter for deploying capital, which helped increase the fees it charges clients.
According to analysts surveyed by Visible Alpha, fee-related earnings rose 25% year-over-year to $690 million, thanks to a 27% spike in management fees and a 41% jump in fees from originating and syndicating deals through its capital markets division.
“Apollo’s fourth-quarter results capped a year of exceptional execution,” said CEO Marc Rowan in a statement. He added that the firm was pushing forward across multiple fronts: financing infrastructure, scaling retirement solutions, and giving more buyers access to private markets.
However, not all numbers were pretty. Net income fell 55% to $660 million, or $1.07 per share, which missed forecasts. Despite that, Apollo’s board approved a $4 billion share buyback, showing confidence in the long-term picture.
AI fears hit private credit as investors dump asset managers
As Apollo doubled down on leasing chips to xAI, the rest of the private credit market wasn’t having such a great week. Shares of big asset managers took a hit, with Ares Management falling over 12%, Blue Owl Capital down 8%, and KKR losing nearly 10%.
TPG fell 7%, while Apollo and BlackRock slipped over 1% and 5%, respectively. The S&P 500 barely budged, down just 0.1%, while the Nasdaq dropped 1.8%.
Why the selloff? Investors are starting to panic about how AI could change the game for borrowers. As software companies get disrupted, cash flow gets tighter, and the risk of default climbs, especially when those buyouts are backed by murky, illiquid loans.
Mark Zandi, chief economist at Moody Analytics, said it’s tough to know the full risk because of how secretive the sector is. Still, he warned that the mix of fast-growing AI-related borrowing, more leverage, and low transparency were flashing big “yellow flags.” His words:
“There will surely be significant credit problems, and while the private credit industry is probably currently able to absorb any losses reasonably well, this may not be the case a year from now if the current credit growth continues.”
Meanwhile, Apollo’s Athene insurance unit brought in $34 billion in annuity inflows over 2025, with $7.3 billion coming in Q4. That’s down slightly from $36 billion in 2024. So retail demand might be cooling off just as risk levels are rising.
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