$AVGO is providing Anthropic with up to $42 billion in financing, which is equivalent to 1.75 times the cash on its August balance sheet
New York, Oct. 1 — Broadcom ($AVGO) has agreed to provide Anthropic with up to $42 billion in loans to fund the AI lab’s infrastructure buildout, according to Anthropic’s IPO prospectus, Reuters reported Thursday. The funds are intended to be used for Anthropic’s five-year TPU compute capacity leasing, for which the chip is jointly designed by Broadcom and Alphabet ($GOOGL).
- Up to $42 billion, in the form of convertible notes issued by Anthropic
- Covers about one-third of the $125.2 billion five-year TPU capacity leasing (33.5%, based on our calculations)
- Broadcom can designate financing partners to hold the debt
- The notes are convertible into Anthropic shares
- No notes are expected to be sold before Anthropic completes its IPO
- Anthropic will deposit the cash into a restricted account in April 2026 for Broadcom’s use
The other side of the deal is Broadcom’s order book. Anthropic is expected to become the biggest customer for Broadcom’s custom chip business next year. During the September earnings call, Broadcom said Anthropic will deploy an additional 5 gigawatts of TPU v8i in 2027, on top of the 1 gigawatt of Ironwood it is set to put online this year, and that it expects AI semiconductor revenue of about $115 billion for fiscal 2027 and $230 billion for fiscal 2028.
I compared this $42 billion with the cash balance in Broadcom’s latest 10-Q: cash and equivalents as of Aug. 2 were $24 billion. This makes the financing-partner terms a key part of the transaction. It mirrors the path Broadcom took in June, when Apollo and Blackstone completed the initial $35 billion funding round for Anthropic’s first 1-gigawatt AI XPV platform.
The $35 billion in June was used to pay for 1 gigawatt. The financing facility sits under a 2027 plan that is five times larger, while the IPO is a key event that kicks it off. Broadcom is now financing demand for order flow supporting its $115 billion AI guidance for fiscal 2027, while $AVGO’s fiscal 2027 is the period when the loan converts into revenue.
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