Key Points
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A new special purpose vehicle will use $63 billion in funding to buy Broadcom’s AI hardware and lease it to Anthropic.
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Broadcom’s maximum potential liability under the deal’s backstop is around $43 billion.
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Broadcom stock is around 29% below its record close in June.
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Broadcom (NASDAQ:AVGO) stock has gone almost nowhere in 2026. At around $342 as I write, the chip designer’s shares trade about 1% below where they ended 2025 — and about 29% under their June 2 record close of $481.57.
Monday’s news gave investors a new reason to look. Bank of America, Blackstone, Citigroup, and Morgan Stanley are providing $63 billion in funding to a newly formed special purpose vehicle that will buy Broadcom’s artificial intelligence (AI) chips for Anthropic. The vehicle will lease the hardware to the AI lab, with deliveries expected to begin in 2027.
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But Broadcom is keeping part of the risk itself. A filing the firm made with the Securities and Exchange Commission on Tuesday pegs its maximum potential liability under the deal at around $43 billion.
Image source: Getty Images.
Anthropic’s 2027 orders just got easier to pay for
The $63 billion isn’t a new order. Deliveries fall under a compute agreement Broadcom and Anthropic had already announced. And Anthropic’s initial public offering (IPO) filing says its five-year equipment leases with Broadcom already call for around $161.2 billion in rent, not counting interest.
What the financing changes is who pays up front. Outside lenders fund the purchase, and the AI lab pays rent over time rather than handing over tens of billions of dollars before the racks arrive.
Put another way, I think the deal makes revenue Broadcom was already counting on more likely to come in.
And Broadcom is counting on a lot of it. On the company’s Sept. 2 earnings call, CEO Hock Tan said he expects Anthropic to deploy another 5 gigawatts of tensor processing units (TPUs), the custom AI chips Broadcom helps design, in 2027. He also expects Anthropic to become Broadcom’s biggest custom-chip customer that year. Management sees AI semiconductor revenue doubling again to around $115 billion for fiscal 2027.
A good bit, but less per dollar financed than last time.
According to Tuesday’s filing, Broadcom is providing “residual value support” to the new vehicle. If Anthropic defaults, Broadcom covers any gap between 72.5% of what’s still owed under the lease and what the racks fetch when they’re sold. The backstop rises as racks are delivered and falls as Anthropic pays its rent.
June’s $35 billion financing, for a 1-gigawatt Anthropic deployment, leaned on Broadcom more. Under that deal, Broadcom covered the gap up to 85% of the amount owed, and its maximum liability was around $29 billion, or about 83% of the financing. This time, the cap comes out to about 68% of the $63 billion.
But the caps for the two deals add up to about $72 billion. Separately, Anthropic can issue up to $42 billion in convertible notes to Broadcom, or a partner it picks, to help pay its rent.
On the Sept. 2 call, Broadcom’s chief financial officer called any such support “modest residual value guarantees.” I’m not sure $72 billion fits that label.
Then again, Broadcom makes lots of cash, and its cash flow is rising faster every quarter. Its free cash flow reached a record $13.7 billion in the fiscal third quarter of 2026, which ended Aug. 2, up from $10.3 billion in fiscal Q2 and $8.0 billion in fiscal Q1. The fiscal Q3 figure was 95% higher than a year before. And Anthropic had around $112.4 billion in cash and cash equivalents at the end of June, according to its IPO filing.
The stock costs about what the market does
Broadcom stock trades at around 18 times analysts’ consensus earnings estimate for fiscal 2027, which starts next week. The S&P 500 (SNPINDEX:^GSPC) trades at about 18.7 times forward earnings.
For a company expecting its AI chip revenue to double next year, that looks like a fair price. It arguably already allows for much of the customer and financing risk.
True, Broadcom now backs tens of billions of dollars of its largest future customer’s build-out, and problems at Anthropic could hurt both its revenue and its balance sheet at once. But it took on less risk per dollar in this deal than in June’s, and the money for 2027’s shipments is in place before the first racks ship.
So, is Broadcom stock a buy 29% below its record? I’d consider buying shares here. With so much riding on one AI lab paying its rent, though, I’d buy a little at a time.
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Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone and Broadcom. The Motley Fool has a disclosure policy.
