Valor Equity Partners has raised $5.4 billion to buy Nvidia GPUs for xAI.

The investment firm has set up Valor Compute Infrastructure (VCI), which will buy and lease data center infrastructure to Elon Musk’s company.

Equipment purchased will include Nvidia GB200 GPUs, which will be deployed at xAI’s data centers in the US, where the company trains and runs its Grok chatbot.

Funds managed by another investment company, Apollo, will contribute $3.5 billion of the total funding. The deal uses a triple net lease structure and comes hot on the heels of xAI raising $20 billion in a Series E funding round, announced on Tuesday, with the proceeds set to be poured into its data center build-out. Valor was one of the investors in this round.

“VCI is an extension of our continued service as a firm to xAI,” said Valor founder, CEO, and CIO Antonio Gracias. “The fund provides investors with the opportunity to invest in critical artificial intelligence compute infrastructure with quarterly cash distributions and upside through ownership of the compute assets.”

A triple net lease means xAI will be responsible for renting the GPUs, and any ongoing expenses related to their use.

Nvidia is also named as a backer of VCI, alongside other unidentified institutional backers. It means that, once again, the GPU market leader has signed up to a circular financing arrangement, where its investment is being used to purchase its own products.

Such arrangements, which Nvidia has also made with companies including OpenAI and several neoclouds, have fueled fears that the AI market is a bubble waiting to burst, and led to Nvidia circulating a memo to financial analysts stating that everything is fine and that it is definitely not the next Enron.

“This transaction represents a hallmark, downside-protected investment for Apollo in the AI infrastructure space and underscores our role as a leading provider of flexible, asset-based capital for next-generation assets,” said Apollo partner Christopher Lahoud. “We are supporting the growth of this transformative technology by investing in the critical infrastructure that enables it, alongside highly regarded partners like Valor and Nvidia, who are driving the next wave of innovation.”