Broadcom lending Anthropic up to $42 billion in yet another AI circular financing deal
Backgrounder:
According to Reuters, which obtained Anthropic’s IPO prospectus, the Big Tech giants are depicted in multiple ways in the IPO filing- as distribution partners, financial backers, computer suppliers, and competitors, all at once. They uncovered the clearest view yet of how circular the AI world really is, and how much an AI lab’s success depends on the giants it’s also competing against.
Reuters was able to calculate that Anthropic pays roughly 16% of every dollar it earns through cloud partners back to its Big Tech partners. It counts the full value of contracts sold through a cloud marketplace as revenue, then treats the platform’s cut as a marketing cost. OpenAI does the opposite by only counting what it keeps after the cloud partner takes its share. That difference matters for understanding the big numbers floating around, and how to actually compare the two rivals’ toplines as they both eye the public market.
Broadcom’s relationship with Anthropic spans compute supply, equipment leasing and financing — giving the semiconductor company a central role in Anthropic’s infrastructure buildout. That differentiates it from other major partners and investors such as Amazon which primarily provide cloud infrastructure and distribution for Anthropic’s AI model Claude.
As part of that complex relationship, revealed in the IPO filing, Broadcom has agreed to lend Anthropic up to $42 billion to finance infrastructure spending. In turn, Anthropic stands to become the largest customer in Broadcom’s entire chip design business next year, making their relationship a prime example of the reciprocal spending that has animated AI skeptics on Wall Street, even as the AI lab readies a public offering that could see it valued at $2 trillion.
“It feels that there’s quite a concentrated bet right now on two companies being able to generate enough revenues to support all the financing that’s happened,” said Robert Leitao, managing partner of Rothschild & Co.
Anthropic disclosed that Broadcom’s role in supplying hardware and acting as a financing partner creates “potential conflicts of interest” that might affect Anthropic’s ability to access the computing power needed for its work, according to the prospectus.
The AI lab also warned that Broadcom’s decisions around pricing and hardware could affect its ability to procure enough computing infrastructure. Broadcom did not comment. Anthropic declined to comment to Reuters.
In April, Anthropic announced it was teaming up with Broadcom and Google for a deal that would see Google provide its Tensor Processing Unit (TPU) chip capacity to Anthropic, with the supply coming online in 2027. Broadcom designs Google’s TPUs that are manufactured by TSMC in Taiwan.
A Broadcom circuit board for chip testing is pictured during a lab tour as Broadcom prepares to launch new optical chip tech to fend off Nvidia in San Jose, California, U.S., September 5, 2025. Brittany Hosea-Small · REUTERS via Yahoo Finance.
Anthropic is also relying on Broadcom for equipment leasing and financing. Broadcom could designate a financing partner, and the debt instruments could be converted into Anthropic shares. Anthropic said in its filing it doesn’t expect any notes to be sold before it completes its IPO. The convertible note Anthropic would issue could finance about a third of the $125.2 billion commitment the AI lab has made for a five-year lease of tensor processing unit (TPU) computing capacity.
Other Players:
Broadcom rivals Nvidia and AMD have also provided funding to their own customers, including OpenAI and Anthropic, which the labs then used to pay for access to the companies’ high-powered chips. The concern about such circular financial schemes is that if one domino in the row falls, it will cause a chain reaction that will decimate the AI trade and, as a result, the global equities markets that have benefited from and come to rely on AI firms and hyperscalers.
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References:
Curmudgeon: Caveat Emptor: Huge Debt and Circular Financing Deals Dominate AI Build-Outs (07/23)
Bain & Co: AI Infrastructure Buildout Will Require $6 Trillion Revenue by 2031 to Support Massive CAPEX
The AI Infrastructure Build-Out: A $10 Trillion Bet on Compute, Power, and Networks
Nvidia CEO Huang: AI is the largest infrastructure buildout in human history; AI Data Center CAPEX will generate new revenue streams for operators
AI risks and backlash increase; Recap of the circular loop of fake AI profits and hyperscaler markups of private AI companies
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