Broadcom may lend Anthropic up to $42 billion to finance AI chip leases

As reported by Reuters, Anthropic revealed in the prospectus for its IPO that Broadcom has agreed to provide financing for AI infrastructure worth up to $42 billion.

As a result, Broadcom finds itself in an unforeseen situation where it is not only supplying chips but also financially backing the infrastructure created around those chips.

When the chipmaker also writes the check

Broadcom’s ties with Anthropic go well beyond that of merely chip vendor. It also provides financial support and lends equipment to Anthropic for expanding its AI infrastructure. Reuters stated that the $42 billion financing will be largely in convertible debt, allowing Broadcom to eventually turn the notes into Anthropic shares post-IPO. Broadcom may also bring in another financing partner.

Broadcom’s financing could cover roughly 33% of Anthropic’s $125.2 billion five-year TPU lease commitment. Besides this, Anthropic increased its collaboration with Google and Broadcom to 5 gigawatts of next-generation TPU capacity beginning in 2027. CFO Krishna Rao said it was the “most significant compute commitment to date” made by the company.

A page from Nvidia’s playbook

Analysts believe that Broadcom is pursuing something similar to what Nvidia has already carried out, namely relying on its financial assets to assist clients in the creation of enormous AI systems.

Nvidia is putting in place a massive amount of its balance sheet, and Broadcom is having to follow suit.

— Seaport Research analyst Jay Goldberg, via Reuters

It is anticipated that by 2027, Anthropic will be Broadcom’s largest compute client. According to Reuters, Broadcom predicts AI semiconductor revenues of about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.

The circular-money worry

That setup has also led to worry regarding the reciprocal AI spending in which providers lend money to clients which then make large investments in their solutions.

It feels that there’s quite a concentrated bet right now on two companies being able to generate enough revenues to support all the financing that’s happened.

— Rothschild & Co managing partner Robert Leitao, via Reuters

Anthropic named the same concern. Its filing mentions that the role of Broadcom as both a provider and lender may lead to potential conflicts of interest. Such factors as pricing, decisions concerning hardware, and certain defaults may impact Anthropic’s ability to access compute and use the lending facility.

Financing as the new battleground

Broadcom has already been building the financial muscle for deals of this size. In June, it launched an AI financing platform with Apollo and Blackstone, beginning with a $35 billion transaction supporting more than one gigawatt of Anthropic compute and targeting more than 20 gigawatts through 2028.

The wider market explains why so much capital is moving into the sector. SIA says AI is driving semiconductor demand, while PwC expects data-center investment to remain a long-term cycle.

Broadcom is already seeing that demand in its results. Cryptopolitan reported fiscal third-quarter AI semiconductor revenue of $16.7 billion, up 221% year over year. The $42 billion facility shows that in the next phase of the AI race, designing the chips may only be half the job. Financing the infrastructure around them could matter just as much.