Shares slid 6% as Bank of America analyst Tom Curcuruto put a jaw-dropping number on the hidden risk lurking behind Broadcom's fastest-growing business: the company's AI chip-financing vehicle could accumulate $370 billion of senior debt by mid-2029 at 20-gigawatt scale, including roughly $150 billion of new issuance in 2027 alone. The stock is now under intense scrutiny — not because demand is faltering, but because the financial plumbing powering that demand may carry more risk than investors appreciated.
The Debt Isn't Broadcom's — Until It Is. The $370 billion isn't Broadcom's debt; the vehicle raises capital and leases custom AI accelerators to customers. But here's the catch: in its latest 10-Q, Broadcom disclosed that an investor partner assumed the purchase and lease agreements, and Broadcom agreed to backstop those lease payments for five years, with maximum exposure of up to $29 billion on the initial transaction alone. If the platform scales to 20 gigawatts, under an extreme scenario of 100% default, potential losses could reach roughly $42 billion. That dwarfs the company's roughly $19.6 billion in cash.
One Customer Concentrates the Risk. Broadcom applied this financing concept to chip leasing and is backstopping Anthropic, tying its own exposure to a customer's moves.
The first $35 billion deal funds more than 1 gigawatt of compute capacity for Anthropic, while the broader platform targets over 20 gigawatts through 2028. If Anthropic's revenue stumbles, Broadcom is on the hook — a concentration risk unusual for a chipmaker.
Bond Markets Are Already Repricing. Since early June, Broadcom bond spreads have widened by 20–30 basis points relative to peers, sitting 30–45 basis points wider than non-AI semiconductor companies like Texas Instruments and Qualcomm.
S&P Global Ratings now considers Broadcom's residual value support a "contingent debt-like obligation" that it will add to its adjusted debt calculation.
The AI Revenue Engine Hasn't Stalled — Yet. Broadcom's fiscal Q2 2026 revenue hit $22.19 billion, up 47.9% year over year, with AI chip revenue surging 143%, and management guided to $16 billion of AI semiconductor revenue for the current quarter.
BofA projects revenue and free cash flow will grow 3–4× from fiscal 2025 to 2028. The paradox: the very mechanism that turbocharges sales growth is the one now worrying credit investors. Shareholders must decide whether they're buying a chip juggernaut or underwriting a shadow bank.