Broadcom weighs $60 billion debt package to fuel AI chip expansion
The semiconductor giant is negotiating a massive borrowing facility to support customer financing, a move that underscores both the scale of the AI infrastructure buildout and the rising leverage on its balance sheet.
Broadcom is negotiating a substantial new debt package, initially reported at more than A$60 billion, to finance AI chip arrangements for customers including Anthropic. According to Bloomberg News, the total value of the deal could swell to A$100 billion once all components are included. The borrowing is designed to support a broader AI infrastructure buildout, specifically underpinning a A$35 billion expansion of Anthropic’s computing capacity.
The financing structure involves Broadcom guaranteeing part of a senior secured tranche estimated between A$60 billion and A$70 billion, alongside a roughly A$30 billion junior tranche. These funds are funneled through a special purpose vehicle, tracing back to a June agreement with Apollo Global Management and Blackstone. The partnership aims to enable more than 20 gigawatts of AI compute by 2028, highlighting how central Broadcom has become to funding the sector’s growth.
This aggressive borrowing comes as Broadcom’s AI semiconductor revenue reached A$10.8 billion in the second quarter, representing an annualised run rate near A$43 billion. Management has indicated a line of sight to more than A$100 billion in AI chip revenue alone by 2027, a figure that would dwarf the company’s A$64 billion in total revenue for 2025. The pipeline behind this target continues to widen, with new client orders expected to come online next year.
However, the market has begun to question the durability of Broadcom’s dominance. Shares fell as much as 5.9 per cent on 19 August after Marvell Technology disclosed a new custom chip agreement with Alphabet. The deal covers AI inference accelerators, storage controllers, and other components, and includes a warrant for nearly 59 million Marvell shares. Although the April TPU agreement between Broadcom and Alphabet remains in place, any sign of that relationship diversifying is being read by investors as a potential threat.
Valuation concerns are compounded by the new leverage. Broadcom trades at 65 times trailing earnings, a multiple that relies heavily on the assumption that 2027 revenue targets are met on schedule. With a forward price-to-earnings ratio of 19.38 as of 20 August, the stock prices in a meaningful earnings jump. If AI capital expenditure from major hyperscalers cools, the thesis built on next year’s numbers could unwind quickly.
Institutional sentiment is shifting, with hedge fund ownership of Broadcom decreasing from 202 funds to 173 between the two most recent quarters. This pullback suggests some buyers are trimming positions rather than adding. Nevertheless, short interest remains low at 1.31 per cent of the float, indicating there is little organised betting against the stock despite the mounting debt load.
