Apollo Is Vastly Outspending the Neoclouds on AI Chips

Last week, SpaceX’s announcement that it would lease $40 billion worth of Nvidia Vera Rubin chips was a further signal of Elon Musk’s grand ambitions in the AI race. The deal also underscores the arrival of a new big player in that competition: Apollo Global Management, a 36-year-old private equity giant.

In the deal with SpaceX, Apollo will purchase the chips through a subsidiary, then lease them to Musk’s company. The arrangement follows a supersized Apollo deal announced in June, one that also involves Broadcom and Blackstone, another large money management firm: a $35 billion fundraising for Apollo to buy Google’s tensor processing units and lease them to Anthropic.

Apollo’s deals with SpaceX and Anthropic will upend the AI landscape. Once the deals are complete and Apollo acquires those chips, only the major hyperscalers will own more chips, and Apollo will have a far larger chip stockpile than any of the neoclouds—the startups that have sprung up to meet skyrocketing demand for the cloud computing services AI development requires. Apollo earns fees from putting together the deals and managing funds that finance the chips.

As the chart above shows, Apollo plans to put far more money into chip purchases than any neocloud has been able to. To assemble this chart, we compiled all of the more than one hundred deals the neoclouds have done to secure and finance chip purchases since 2023—the year in which CoreWeave, the largest neocloud, kick-started the surge in chip financing deals with Blackstone’s help. To identify all these deals, we relied on earlier research from American Compute, a type of insurance broker for GPU deals.

The deals within our estimates were completed using a technique pioneered by CoreWeave and Blackstone. In these deals, a neocloud and their financial partners form a special purpose vehicle that issues debt to buy the chips. (Lease payments from the end users of the chips pay off the debt.) Unlike Apollo, many of the neoclouds have committed additional capital to developing data centers to house the chips.

Importantly, the chart doesn’t include the convertible bonds and credit facilities the neoclouds have raised to fund their operations. They may have used that money to buy chips. The hyperscalers, meanwhile, don’t need to use SPVs because they can make chip purchases through free cash, equity issuances or traditional corporate debt.

Our estimates do not include another giant transaction announced last week: the $63 billion deal arranged by Citigroup, Bank of America and Blackstone to finance Anthropic’s purchase of Broadcom chips. The companies didn’t disclose who will actually own those chips.

Chip financing is a new role for Apollo. Co-founded by billionaire Leon Black, it rose to prominence through leveraged buyouts, including its nearly $30 billion takeover of casino giant Harrah’s Entertainment in 2008. Over the last decade or so, Apollo has amassed more capital from insurance companies, which like the type of higher-yield but still investment-grade debt a lot of the chip financings represent.