Broadcom's $100 Billion Credit Question: AI Ambition Meets a Market's Skepticism

Broadcom's massive AI financing for Anthropic sparks credit concerns and competitive shifts, as shares drop 27% from highs.

The arithmetic of Broadcom's latest gambit is as staggering as it is simple: borrow tens of billions to build out AI infrastructure, and hope the revenue that follows outpaces the interest bill. The market, for now, is hedging its bets.

Shares of the semiconductor giant closed Friday at €315.45, up 1.1 percent on the day, yet that modest bounce masks a bruising stretch. The stock has shed 7 percent over the past seven sessions and nearly 9.5 percent over the past month, leaving it roughly 27 percent below the 52-week high of €429.60 touched in early June. The tension is palpable: a historic financing package aimed at securing Broadcom's place in the AI buildout is being weighed against the very real costs — financial and competitive — of that ambition.

A Credit Package That Raises Eyebrows

At the heart of the matter are reports from Bloomberg and Reuters that Broadcom is negotiating a financing package of up to $100 billion to expand its AI chip infrastructure for Anthropic. CNBC has pegged the likely credit volume at $70 billion to $80 billion, structured as a senior secured tranche of roughly $45 billion and a junior tranche of about $35 billion. Blackstone and Apollo are said to be participating, with the financing running through off-balance-sheet special purpose vehicles. The deal builds on a $35 billion partnership with Anthropic established in June and targets more than 20 gigawatts of capacity by 2028.

Credit markets have taken notice — and not in a way Broadcom would prefer. The company's credit-default swap spread jumped to a record 122 basis points on Friday, while Bank of America flagged that Broadcom's bond spreads now sit 20 to 45 basis points wider than comparable issuers. The market is beginning to price in the risk of the off-balance-sheet structure before the underlying numbers have even been reported.

The scale of the commitments is sobering. According to financing details, Broadcom has pledged residual value guarantees of up to $370 billion through 2029, with a maximum loss of $42 billion in a hypothetical total-default scenario. That sits against a debt ratio of 71.5 percent — sharply higher than rival Marvell's 27.2 percent.

The Competitive Front: Google's Pivot to Marvell

Compounding the financing debate, a second force has weighed on the stock: Google's expanded partnership with Marvell in custom silicon, which includes a warrant for 58.97 million Marvell shares valued at roughly $12.2 billion. The news sent Broadcom shares down 5 to 6 percent on a single day, while Marvell climbed as much as 10 percent.

The competitive signal is real, though its magnitude deserves context. Broadcom isn't losing Google's business entirely — the existing agreement reportedly runs through 2031 — but the notion of unchallenged dominance in custom silicon has taken a hit. Add to that a VMware security vulnerability and a Bank of America downgrade, and the bear case has plenty of ammunition.

The Bull Case: Growth That Outweighs the Noise

Yet the numbers on the operational side tell a story that's hard to dismiss. Broadcom's AI semiconductor revenue grew 143 percent year over year in the second fiscal quarter, reaching $10.80 billion, while total revenue came in at $22.19 billion, up 47.87 percent. The company has guided to 84 percent growth for the third quarter, backed by AI order intake exceeding $30 billion in a single quarter. Management points to a pipeline extending through 2028.

For the current fiscal year 2026, AI revenue is projected at $56 billion, with the company targeting more than $100 billion in fiscal 2027. Analysts expect third-quarter revenue of $29.25 billion with earnings per share of $3.21, a 90 percent year-over-year increase. BMO Capital Markets recently initiated coverage with a buy rating and a $455 price target, while 24/7 Wall St. sees room to $403. Summit Research has called the recent selloff overdone, arguing that AI monetization remains intact.

Long-term contracts with Meta and OpenAI, alongside 15 years of dividend growth, underpin a picture of stable cash flow that could plausibly carry the financing burden — provided demand for custom AI chips holds.

Macro Headwinds and Technical Signals

The broader environment hasn't helped. The 30-year US Treasury yield climbed above 5.3 percent this week, the highest since June 2007. In such a rate environment, any additional debt load looks more menacing, regardless of underlying business quality. Rising yields on ten-year Treasuries have similarly pressured high-valuation technology names.

Technically, the stock's RSI of 36.8 suggests oversold conditions, with shares trading about 7 percent below their 50-day moving average. That could support a short-term bounce — or simply mark another waypoint on a continued descent.

The September 2 Verdict

The decisive moment arrives September 2, when Broadcom reports third-quarter results for fiscal 2026. That's when the market will see whether the growth trajectory justifies the leverage — or whether the credit market's caution was prescient.

For now, the debate splits into two camps. The bulls see a company financing demonstrable, rapid growth in AI with backing from marquee investors like Blackstone and Apollo. The bears see a balance sheet stretched to its limits, a resurgent competitor, and credit markets signaling discomfort with a structure that has yet to prove itself.

The recent share weakness may ultimately read as a valuation correction within an intact growth market — or as the first tremor of something more structural. The answer, as with so much in this AI cycle, comes down to whether the promised revenue actually materializes.