Apollo Global Lends Record $114bn as AI Financing Boom Accelerates

Apollo Global Dominates AI Financing with Record Quarterly Lending

Apollo Global has cemented its position as a dominant force in AI financing, lending a record $114bn in the third quarter of 20241

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. This represents a surge of more than 50% from the second quarter, driven primarily by the AI borrowing boom1

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. The New York-based private capital group has now lent over $350bn in the past 12 months—nearly a third more than the previous year—reaching volumes that rival large commercial banks such as HSBC and Citigroup1

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Financing AI-Related Companies Through Chip Collateralization

Apollo Global has emerged as a critical lender to Big Tech firms seeking billions to fund AI infrastructure financing1

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. The firm provided funding through chip-financing transactions for Anthropic and arranged a $500bn financing effort for chipmaker Nvidia1

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. Apollo has also extended AI lending to Elon Musk's SpaceX and xAI1

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. These deals involve collateralizing loans against AI chips, arranging complex financings that leverage valuable chip assets as security2

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. Beyond AI, Apollo's third-quarter lending extended to a US pipeline network in Oklahoma, German pharmaceutical conglomerate Bayer, and the New York Yankees baseball team1

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Rivals Hesitate as Apollo Embraces Chip-Backed Lending

While Apollo lends record $114bn against AI infrastructure, competitors remain cautious about this nascent market. Ares Management CEO Michael Arougheti told shareholders his firm has avoided collateralizing loans against AI chips because he does "not know how to underwrite the decline in depreciation curves on that type of technology"1

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. This reluctance highlights concerns about underwriting depreciation risks associated with rapidly evolving chip technology. Some large commercial banks also fear overexposure to individual technology giants after a multitrillion-dollar borrowing binge, making them hesitant to extend additional credit over concerns of becoming overly reliant on any single customer1

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Mixed Financial Results Despite Record Lending Activity

Despite record lending volumes, Apollo's quarterly results presented a mixed picture. The firm wrote down its sprawling $1tn investment portfolio by $3.2bn to reflect rising interest rates, which impacted the value of fixed income and private equity investments1

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. Spread profits at its insurance operations declined due to higher funding costs from rising interest rates1

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. Apollo pulled back from writing new business at its insurance unit due to intense competition that eroded potential profits, with quarterly inflows falling to $19bn—the lowest figure this year1

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. The group recorded a net loss of $1bn when accounting for portfolio markdowns, though adjusted net income was $1.3bn1

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. Apollo is on track to attract approximately $80bn in new insurance cash this year, roughly matching last year's figures and marking the end of a multiyear rapid growth stretch1

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Questions Emerge About AI Investment Returns

Apollo Chief Economist Torsten Slok recently noted that despite massive investments in artificial intelligence, the technology has delivered limited financial payoff to corporate America outside of tech2

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. "Revenue per worker is rising for the Mag 7 but is flat for the S&P 493," Slok wrote, referring to the Magnificent 7 companies—Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla2

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. His note suggested many corporations are "pulling back and starting to view token spending not as a source of growth but as a cost center that weighs on margins"2

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. This raises questions about whether Apollo's aggressive AI financing strategy will face headwinds if broader corporate AI adoption fails to generate expected returns, potentially affecting demand for AI infrastructure financing in coming quarters.