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Broadcom Inc. (NASDAQ:AVGO) traded down more than 5% Friday as a new estimate put an enormous number on the debt machine behind the chipmaker’s AI expansion.
BofA analyst Tom Curcuruto estimates Broadcom’s chip-financing vehicle could reach $370 billion of senior debt by mid-2029 at a 20-gigawatt scale, including roughly $150 billion of new issuance in 2027 alone, Reuters reported Friday.
That does not mean Broadcom itself would owe $370 billion. The financing vehicle would raise the debt, but Broadcom has agreed to backstop some of the customer lease obligations.
Prediction market traders are betting Broadcom’s AI business will deliver another huge quarter. The company generated $10.8 billion of AI semiconductor revenue last quarter and has guided to $16 billion for the current quarter.
Polymarket traders currently give Broadcom a 94% chance of topping $15 billion in AI revenue this quarter, and a 78% chance of exceeding $16 billion.
How a $35 Billion Anthropic Deal Became Broadcom’s Problem Too
The structure began taking shape in June, when Apollo (NYSE:APO) and Blackstone (NYSE:BX) led a $35 billion financing for Broadcom’s AI XPV Platform. The first deal will fund more than 1 gigawatt of compute capacity for Anthropic, while the broader platform is designed to support more than 20 gigawatts for frontier AI labs through 2028.
Instead of requiring AI customers to fund the entire upfront cost themselves, institutional investors finance the AI racks and lease them to the customers. But Broadcom is taking on some of the risk that makes that financing possible.
In its latest 10-Q, Broadcom disclosed that an investor partner assumed agreements to purchase racks containing its custom AI accelerators, along with the leases to the customer using them. Broadcom agreed to backstop those lease payments for five years, giving it maximum exposure of up to $29 billion on the initial transaction.
If a customer defaults, Broadcom can take over the lease or arrange a sale of the equipment, reducing whatever amount it ultimately has to cover.
Is Broadcom Financing Its Own AI Growth?
The financing structure could help Broadcom turn strong demand for AI chips into actual deployments by giving customers access to outside capital for the enormous upfront cost of new compute capacity.
But Broadcom is also taking on risk alongside those sales. Under the backstop arrangements it has disclosed, the company could be required to cover customer lease payments if a customer defaults.