Broadcom Stock Rises on $42 Billion Anthropic Financing Deal
Broadcom Inc. (AVGO) saw its stock rise after reports of a $42 billion financing deal with Anthropic, according to Reuters. The loan, detailed in Anthropic’s IPO prospectus, aims to support the AI company’s infrastructure expansion. In return, Anthropic is expected to become Broadcom’s largest compute customer by 2027, significantly boosting demand for Broadcom’s chips.
The deal highlights Broadcom’s deepening relationship with Anthropic, which has similar financing arrangements with Amazon and Microsoft. Critics warn of potential risks, as this circular financing could spread damage across the AI sector if any part of the deal fails.
Broadcom’s stock has climbed 13% over the past six months, with a current price of $355 as of October 2. Analysts project a stock price target of $531, up from its 52-week high of $495. The company’s Q3 revenue surged 86% to $29.6 billion, with AI chip revenue up 221% to $16.7 billion.
Despite strong growth, margins are a concern. Broadcom expects gross margins to drop to 73% in Q4 from 78% a year earlier, citing increased memory-heavy chip production. The company forecasts AI revenue of $115 billion in fiscal 2027 and $230 billion in 2028, with Anthropic playing a pivotal role in these projections.