Key Stats for Broadcom Stock
- Price change for Broadcom stock in last 6 months: 13%
- $AVGO Stock Price as of Oct. 2: $355
- 52-Week High: $495
- $AVGO Stock Price Target: $531
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What Happened?
Broadcom (AVGO) is reportedly lending up to $42 billion to Anthropic. Reuters obtained Anthropic’s IPO prospectus, which shows the loan would help fund its infrastructure buildout.
In return, Anthropic is expected to spend heavily on Broadcom’s technology. It is estimated to become Broadcom’s largest compute customer by 2027.
In April, Anthropic said it was teaming up with Broadcom and Google, with the latter providing Tensor Processing Unit (TPU) capacity, with supply coming online in 2027.
Broadcom designs Google’s TPUs. Anthropic is also using Broadcom for equipment leasing and financing.
This kind of deal raises questions.
Anthropic has similar arrangements with Amazon and Microsoft. Nvidia and AMD have also funded customers that then buy their chips.
Critics call this circular financing. The worry is that if one piece fails, the damage could spread across the AI trade and the wider market.
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What the Market Is Telling Us About Broadcom Stock
For Broadcom stock, the deal shows how deep the Anthropic relationship has become. It also shows the risk. The company is helping fund the same customer that buys its chips.
On its September call, Broadcom described the financing a bit differently. It said it works with Apollo and Blackstone through a platform called XPV.
Outside partners underwrite the assets, rather than Broadcom lending directly. Broadcom said it may give “modest” residual value guarantees.
The first $35 billion tranche closed in June for Anthropic’s 1 gigawatt deployment.
Broadcom expects Anthropic to deploy another 5 gigawatts in 2027. It sees a path to 10 more in 2028.
Management called Anthropic its likely largest chip customer in 2027.
The results back that up.
Q3 revenue hit $29.6 billion, up 86%. AI chip revenue rose 221% to $16.7 billion. Free cash flow was a record $13.7 billion. Broadcom expects AI revenue of about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.
Margins are one watch point. Gross margin is expected to fall to about 73% in Q4 from 78% a year ago. Broadcom blames the growing share of chips with more memory.
Broadcom stock may keep moving on how Anthropic’s IPO goes.
Investors will also watch how Broadcom backs its customers. Broadcom stock could also react to any new details on guarantees.
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So what is Broadcom stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
