Apollo Global Management could grant a $3.4 billion loan to an investment vehicle that buys Nvidia chips to lease to Elon Musk’s xAI at any moment.
Less than a week ago, Musk announced that SpaceX is acquiring xAI. The deal values the rocket-and-satellite company at $1 trillion and the AI startup at $250 billion. Musk says that combining SpaceX and xAI is partly about developing data centers in space. These would use space-based infrastructure to support the next generation of AI computing.
The investment, which may be finalized this week, is being arranged by Valor Equity Partners, a long-time investor in Musk’s companies. This is Apollo’s second major investment in an investment vehicle that leases chips to xAI, following a similar $3.5 billion loan in November.
Leasing model for rapid scaling
Leasing chips and compute infrastructure allows AI startups such as xAI to scale rapidly. Capital that would otherwise be tied up in costly hardware purchases remains available for other investments. For xAI, this is crucial in the battle against established players OpenAI and Anthropic.
The financing is structured as a triple-net lease to support one of the world’s largest compute clusters for AI model training. Nvidia itself is also participating as an anchor investor in the investment vehicle, underscoring the strategic value of the construction.
Big tech companies are expected to invest more than $600 billion in advanced chips and massive data centers this year. That infrastructure is needed to train and roll out AI systems. Musk previously stated that space will become the most economically attractive location for AI infrastructure within 30 to 36 months. The combination of SpaceX and xAI should make this possible by using satellites that each generate approximately 100 kW of computing power per ton.