A recent leak of Anthropic's initial public offering (IPO) prospectus demonstrated how expensive it is to build super-powerful artificial intelligence. Despite impressive revenues, the company faces cash flow gaps while striving to secure sufficient computing power to maintain a competitive edge.
Due to financial difficulties, Anthropic was in urgent need of capital to support large-scale hardware. To address this colossal infrastructure challenge, an unprecedented move was made: Broadcom agreed to provide Anthropic with a substantial loan of $42 billion as part of a major financial deal.
This deal between Broadcom and Anthropic goes beyond simply providing funds; it is highly strategic and was included in Anthropic's recent IPO prospectus. Broadcom is effectively financing the startup's infrastructure costs through a large convertible debt transaction.
Anthropic is legally obligated to enter into a five-year lease agreement for Tensor Processing Unit (TPU) capacity worth an incredible $125.2 billion. This volume of equipment is enormous, and the large loan from Broadcom covers approximately one-third of these obligations.
Together with Google, Broadcom will supply these next-generation TPUs starting in 2027. This will allow Anthropic to gain the necessary computing power to compete with OpenAI, while Broadcom secures a stable and significant revenue stream.
This approach is similar to the tactic previously employed by NVIDIA. In recent years, NVIDIA has used its strong balance sheet to finance ambitious AI startups. These startups received large capital injections, which they then spent on purchasing NVIDIA GPUs, creating a closed loop of expenditure.
Broadcom is implementing the same strategy, using its financial might to artificially stimulate demand for its own chips. By providing this large line of credit, Broadcom ensures that Anthropic will be long-term tied to its hardware. By 2027, Anthropic is projected to become Broadcom's largest consumer of computing power.
Anthropic is preparing for a public listing that could value the company at an astronomical $2 trillion. However, there is increased caution on Wall Street regarding such interconnected technology deals. Anthropic acknowledged in its documentation that Broadcom's dual role—as both a critical hardware supplier and the primary lender—creates obvious conflicts of interest.
If Anthropic fails to meet its targets, the situation could become extremely difficult, as a significant portion of the lease obligations may suddenly come due. The race in AI infrastructure is narrowing down to a few large institutional players requiring gigawatts of energy and thousands of advanced chips to create frontier AI models.
Broadcom's willingness to allocate $42 billion demonstrates how profitable the custom AI chip market has become and shows how startups are attempting to circumvent the dominance of large industry players.
