2026-10-27

Broadcom Arranges $63 Billion Financing for Anthropic's AI Chips - Inside CEO Hock Tan's Two-Month Scramble to Save the Deal

Written & reviewed by the TradeSmrt editorial team · 2026-10-27

In this article

What Happened
Three Things This $63 Billion Deal Tells Us
What to Take Away From This
FAQ
Sources

What Happened

On Monday, October 26, Bank of America, Blackstone, Citi and Morgan Stanley jointly announced a $63 billion financing structure built alongside Broadcom (NASDAQ: AVGO) to fund the AI computing capacity Anthropic needs. The timing was almost too convenient to notice: the announcement landed the very same day Anthropic filed its S-1 registration statement for a Nasdaq listing, so this financing story risked getting buried under IPO headlines. It shouldn't be. For anyone holding semiconductor stocks, the mechanics here matter more than the topline number.

Here's how it works. A newly formed special purpose vehicle (SPV) buys Broadcom's AI accelerators (XPUs) and networking gear, then leases that hardware to Anthropic. Of the $63 billion the SPV needs, Bank of America, Citi and Morgan Stanley arranged the first-lien (senior) tranche, while Blackstone is the sole provider of the second-lien (subordinated) tranche. Reuters and other outlets reported the senior tranche at roughly $43.5 billion, or about 69% of the total. The critical detail: Broadcom is providing residual value support to the SPV in an amount matching that senior tranche. In plain terms, if Anthropic falls behind on lease payments or the arrangement breaks down, Broadcom has agreed to guarantee the residual value of the hardware, effectively absorbing losses the lending banks would otherwise take. Deliveries are expected to begin in 2027, and the deal sits inside a broader, already-existing strategic compute agreement between Broadcom and Anthropic.

Internally, the deal carried the code name "Project North Star." According to the Wall Street Journal, it almost didn't happen. Several of the participating banks reportedly got cold feet over how the risk was being divided and considered walking away before the deal closed. Broadcom CEO Hock Tan personally stepped into negotiations over roughly two months to keep it alive, ultimately agreeing to higher interest rates and stronger guarantees against the risk of an Anthropic default to bring the banks back to the table. His remark in one interview that "the biggest constraint is capital" captures something real about where AI infrastructure stands right now: demand isn't the bottleneck anymore - financing is.

Before the official announcement, Reuters had already reported, citing Anthropic's IPO prospectus, that Broadcom could lend Anthropic up to $42 billion. That report alone pushed Broadcom shares up 2.1% to $362.51 from the prior close of $355.14. Once the four financial institutions and Broadcom jointly confirmed the full $63 billion structure, the optimism spread further across semiconductor and AI infrastructure names.

Three Things This $63 Billion Deal Tells Us

First, the way AI infrastructure gets paid for is changing shape. Just a year or two ago, Big Tech companies largely funded data center buildouts out of their own cash flow or corporate bond issuance. This deal looks completely different: a private AI company that isn't even public yet is effectively renting the hardware it needs through an SPV engineered jointly by its chip supplier and some of Wall Street's largest banks and private-equity firms. This isn't a one-off, either. Earlier this year, Broadcom struck a similar $35 billion financing arrangement with Apollo and Blackstone covering 2026 shipments, backing 80% of that deal's value itself. The new $63 billion structure dwarfs that precedent, and it suggests AI infrastructure financing is evolving toward ever-larger, ever-more-complex arrangements.

Second, Broadcom has positioned itself as both the seller of the chips and, through the residual value guarantee, a backstop for its own customer's credit risk. That's a distinct variant of the "circular financing" structure that's been drawing scrutiny across the AI trade. Where Nvidia and AMD holding equity stakes in Anthropic while also supplying it is one version of that circularity, Broadcom guaranteeing a customer's creditworthiness on banks' behalf is another. Technically, the SPV is the primary borrower, so Broadcom doesn't face an immediate loss if Anthropic can't pay. But if the residual-value clause is ever triggered, the exposure flows straight back onto Broadcom's own balance sheet. Some analysts still rate Broadcom among the most solid credits in big tech, but they've also flagged that stacking several of these deals in quick succession could let aggregate risk build up faster than it appears on the surface.

Third, the fact that banks initially balked is itself a signal worth sitting with. Top-tier Wall Street institutions - Bank of America, Citi, Morgan Stanley - didn't accept this risk structure at face value, and it took Hock Tan personally offering higher rates and extra guarantees to get them back in. That negotiation, hidden behind the polished press release, is arguably a more honest read of what AI infrastructure financing actually costs right now than the $63 billion headline figure itself. The real risk premium shows up in the concessions it took to close the deal, not in the round number investors see in the headline.

What to Take Away From This

Look at the structure before you look at the size. A $63 billion headline matters less than knowing whose assets back it and who ultimately absorbs the risk if it goes wrong. SPV structures and residual-value clauses tend to live in the footnotes, not the press release.
A supplier guaranteeing its customer's credit risk is good news and bad news at once. In the short run it extends the customer's purchasing power and pulls revenue forward for the supplier. In the long run, it ties the supplier's own balance sheet health to how well that customer's business actually performs.
The fact that banks hesitated is information in itself. Official announcements only show you the finished deal. Tracking who balked and what concessions it took to bring them back gives a far more accurate read of the real risk level than the final press release does.
Watch for the pattern repeating, not just the single deal. A $35 billion Apollo/Blackstone arrangement earlier this year, followed by this $63 billion structure - the same type of financing recurring at increasing scale is a signal that leverage is building up across the sector as a whole, not just at one company.

FAQ

Is Broadcom actually lending money to Anthropic here?

Not directly. The actual lenders are Bank of America, Citi and Morgan Stanley (senior tranche) and Blackstone (subordinated tranche), and the formal borrower is the newly created SPV. Broadcom's role is to provide residual value support to that SPV in an amount matching the senior tranche - a credit-enhancement mechanism that guarantees the hardware's value if Anthropic fails to meet its obligations.

Why did Broadcom's own CEO need to spend two months personally negotiating this?

Reports indicate several participating banks grew uneasy with how risk was being allocated in the structure and were considering walking away. Hock Tan stepped in directly to keep the deal from collapsing, ultimately agreeing to higher interest rates and additional default guarantees to bring the banks back on board.

How does this connect to the broader "circular financing" controversy around AI stocks?

The original circular-financing concern centered on Nvidia and AMD holding equity stakes in Anthropic while also supplying it chips. This Broadcom deal shows a different version of the same underlying issue: a supplier standing behind its own customer's creditworthiness on behalf of outside lenders. As supply, investment and credit guarantees become more intertwined across the AI value chain, investors need to track these structural risks just as closely as any single company's quarterly results.

Sources

This article is an original synthesis and analysis based on the reporting below, not a reproduction of the source articles. Please check the original sources directly for the most current figures.

⚠️ This article is for informational purposes only and does not constitute investment advice. Market conditions change constantly, so always verify the latest data before making investment decisions.