Top image: Broadcom’s headquarters campus. The chipmaker is headquartered in Palo Alto. Photo: Coolcaesar / CC BY-SA 4.0 via Wikimedia Commons
Four of Wall Street’s biggest financial firms announced a $63 billion financing on Monday. The money will put Broadcom’s AI hardware into Anthropic’s hands without either company carrying the full bill on its balance sheet. It is one of the largest debt deals yet tied to the AI build-out, Reuters reported.
The structure
According to the joint announcement, a newly formed special purpose vehicle will use committed financing from Bank of America, Blackstone, Citi and Morgan Stanley to buy Broadcom’s XPU AI accelerators and networking equipment. The vehicle will then lease that equipment to Anthropic. Deliveries are expected to start in calendar 2027, under a compute capacity agreement Broadcom announced earlier.
- **First lien (senior debt):** arranged by Bank of America, Citi and Morgan Stanley. Two sources told Reuters it totals about $43.5 billion, or 69% of the package.
- **Second lien:** Blackstone is the sole provider of the committed portion, according to the release.
- **Broadcom’s support:** The Palo Alto chipmaker is providing “residual value support” to the vehicle “for the amount equivalent to the first lien portion of the financing.” Reuters described that as effectively a significant guarantee.
The release did not break down the loans, and Broadcom did not respond to Reuters’ request for comment.
What the executives said
“Today’s transaction underscores the power of our advanced technology and our strong conviction in the AI ecosystem,” said Broadcom President and CEO Hock Tan. “This validates that there is capital available to finance such growth and that Broadcom is uniquely positioned to enable it.”
Blackstone President Jon Gray said “the rapidly growing demand for AI is creating an enormous opportunity to finance compute capacity at scale.” Citi’s Vis Raghavan said “financing AI demands capital solutions at unprecedented scale.” Morgan Stanley Co-President Dan Simkowitz called the deal “an important milestone in enabling the next buildout of AI compute capacity,” and Bank of America Co-President Jim DeMare said it “brings together Broadcom’s leading technology and significant bank capital.”
Kirkland & Ellis advised Blackstone, Latham & Watkins advised the banks and Sullivan & Cromwell advised Broadcom, with Evercore as Broadcom’s financial adviser, the release said.
The second deal of its kind
This is not the first time Broadcom has stood behind financing for Anthropic. Apollo and Blackstone earlier agreed to finance a $35 billion expansion of Anthropic’s computing capacity under a prior agreement with Broadcom, and Broadcom’s backstop in that deal was up to $29 billion, Reuters reported, citing a company filing.
That repetition is what credit analysts are watching. Moody’s described Broadcom as one of the strongest large technology companies but warned that the risk would increase if multiple transactions were undertaken over a short period to meet the large funding needs of frontier AI labs, according to Reuters.
Why it matters
The structure moves the cost of AI chips off the books of the company using them and into a vehicle funded by banks and private credit. The chipmaker, in turn, absorbs the risk that the hardware loses value. For Broadcom, that ties part of its balance sheet to how long its custom accelerators keep their value. For Anthropic, which filed for an initial public offering the same day, it secures a large block of future compute through leases rather than outright purchases.
The deal also fits a broader pattern the Chronicle has tracked. Chip suppliers are increasingly acting as financiers, as with Nvidia’s backstops for neocloud providers, while the biggest AI spenders raise outside capital, as Meta did with its roughly $35 billion equity offering.
Leave a Reply