Broadcom Inc. (NASDAQ:AVGO) CEO Hock Tan stepped in over the weekend to secure a $63 billion financing deal for Anthropic after several banks considered pulling out, The Wall Street Journal reported Monday.
The banks had grown nervous about lending billions of dollars to finance AI chips, amid rising interest rates and concerns about the industry’s enormous spending commitments.
Tan held last-minute talks with bank executives, agreeing to higher interest rates and stronger financial protections to get the deal over the line, the Journal reported.
Just two weeks earlier, Tan had warned that financing could become the biggest obstacle to the AI boom.
“What I think might be the biggest constraint is capital,” he said at an Oct. 12 conference.
The companies announced the $63 billion agreement Monday, the same day Anthropic publicly filed for its IPO.
Broadcom Takes on Billions in Financial Risk
The $63 billion deal will finance specialized AI chips and networking equipment that Anthropic, the developer of the Claude chatbot, will lease to power its models.
A newly created company will borrow the money to purchase the equipment, with Anthropic’s lease payments helping repay the loans.
Bank of America Corp. (NYSE:BAC), Citigroup Inc. (NYSE:C) and Morgan Stanley (NYSE:MS) are arranging the senior financing, while Blackstone Inc. (NYSE:BX) is backing riskier debt.
Broadcom isn’t just selling chips. It is also providing financial protection tied to approximately $43.5 billion in senior financing, Reuters reported.
That could expose the chipmaker to losses if Anthropic defaults and the equipment’s value falls short.
AI Financing Shows Signs of Strain
Morgan Stanley has reportedly struggled to sell approximately $300 million in bonds tied to a Lambda data center project, despite roughly doubling the yield offered to investors.
The cost of insuring CoreWeave (NASDAQ:CRWV) debt against default hit a 12-month high last week, reflecting growing investor concerns about the AI infrastructure company’s finances.
On Polymarket, traders assign a 12% probability to CoreWeave announcing bankruptcy by December 2027, rising to 27% by the end of 2029.
In a separate AI bubble market, traders put the probability of an industry downturn at 9% by December 31 and 23% by June 30, 2027. The market requires at least three specified signs of a severe downturn within 90 days.
Despite the difficult negotiations, Tan maintained an optimistic outlook in Monday’s official statement.
“This validates that there is capital available to finance such growth,” he said.
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