Broadcom's AI backstops reach up to $72.5bn. Who takes the losses?
Broadcom backs up to about $72.5bn of customer chip financing, three times its $24.0bn cash balance. Meta has priced only $37.5bn of its $97.5bn equity plan.
Broadcom now backs up to about $72.5bn of its customers' chip financing, three times its $24.0bn of cash. That sum is our arithmetic: the $29bn cap on the June tranche plus the $43.5bn first lien. It sits behind two deals, Anthropic's new $63bn and a $35bn tranche from June.
Meta priced $37.5bn of new equity on Monday night. The same day, Bank of America, Blackstone, Citi and Morgan Stanley announced a $63bn financing of Broadcom chips for Anthropic. Earlier in October, CoreWeave's bonds had sold off. The three deals differ on one question: who loses first.
Only part of Meta's money is contracted, and its shareholders absorb any loss through the share price. At Anthropic's $63bn, Blackstone's second lien ranks behind the banks' first lien. At CoreWeave, the notes carry no collateral, and they are the paper that sold off.
How Anthropic's chip financing works
Anthropic's $63bn is not Anthropic's debt. A new special purpose vehicle, a company set up to hold the assets, buys Broadcom chips and leases them to Anthropic. Deliveries start in 2027.
Bank of America, Citi and Morgan Stanley arranged the first lien. Blackstone is the sole committed provider of the second lien, according to the Blackstone release.
Broadcom backs the first lien. It gives the vehicle residual value support for an amount equal to the first lien, the release says. Reuters reported the first lien at about $43.5bn, or 69 percent of the total.
Broadcom's 10-Q shows how its June tranche works: if the customer defaults, Broadcom pays the gap between 85 percent of the amount owed and what the racks fetch.
The other $19.5bn ranks below the first lien. A second lien is repaid after the first, so it takes a loss before the first does.
Broadcom calls a loss on its own support unlikely. Its 10-Q calls its guarantees contingent liabilities of "low probability of occurring", citing "the strong profitability trajectory of the leading frontier AI labs". It puts the fair value of its backstop at "not material".
The 10-Q puts the maximum backstop on that $35bn June tranche at about $29bn. Add the new first lien support of about $43.5bn and the total is $72.5bn.
Reuters reported that Moody's calls Broadcom one of the strongest large technology companies. It warns that risk rises if several such deals come in a short period.
Anthropic's S-1 covers its existing Broadcom leases. Five year master leases carry about $161.2bn of rent before interest, for chip capacity that began coming online in 2026. Two special purpose subsidiaries signed them, and Anthropic guarantees the obligations.
Anthropic's cash is large next to that rent. It held $112.4bn at 30 June, or 70 percent of the $161.2bn total.
Revenue is catching up with the rent. First half revenue of $16.3bn was 14 times the year before, and the second quarter alone brought $11.6bn, a $46.4bn annual pace.
The cushion is a convertible line tied to a different lease. Anthropic can issue up to $42.0bn of convertible notes to Broadcom or a partner, solely to pay rent on its March 2026 lease. That lease carries about $125.2bn of rent, and none of the notes had been issued at 30 June.
The notes pay 9.00 percent interest in kind, meaning it is added to principal. The rate rises to 13.00 percent if revenue tests are missed.
How much of Meta's plan brings cash
Meta's plan adds up to $97.5bn. The pricing release shows $12.5bn of 6.50 percent mandatory convertible preferred stock, which brings cash when it closes on 29 October.
The release also shows $25.0bn of Class A stock at $625.00 sold through forward contracts. Meta receives that money only when it settles them, on dates it picks by 19 November 2027.
The last $60bn is an at the market (ATM) programme, a ceiling for selling shares gradually. Meta's filing says it "has not entered into any agreement" for it. The programme is not expected to start before 2027. So 38.5 percent of the headline is priced, and 12.8 percent is cash this week.
Meta's two dealers can accelerate settlement. Morgan Stanley and Goldman Sachs, the forward buyers, may speed up settlement if a listed event occurs. Examples are a dividend on the common stock or an announced takeover. They would do so "irrespective of our interests, including our need for capital", the prospectus supplement says.
The preferred stock costs $812.5m a year in dividends, about $2.2bn through August 2029. It also caps what its holders gain. Each $1,000 preferred share converts into 1.6 Class A shares if Meta trades at or below $625.
Between $625 and $734.21 holders get shares worth $1,000, so they gain nothing. Above $734.21, which is 17.5 percent over $625, they get 1.362 shares and the upside resumes.
Dilution comes in three steps. The forward adds 1.6 percent to Meta's 2,556m shares and the convertible 0.7 to 0.8 percent. A $60bn ATM at $625 would add about 96m shares, or 3.8 percent. Together that is 6.0 to 6.1 percent.
Meta has cash to wait. Its 10-Q shows $97bn of operating cash flow in nine months and $82bn of cash and securities, against capex guidance of $135bn to $145bn.
The ATM only starts once Class C stock trades, and Meta is not forced to sell. If it needs the money in a weak market, shareholders pay through the share price.
Three of Meta's suppliers, Nvidia, AMD and Broadcom, have indicated interest in up to $5.0bn of the Class A offering. The interest is not binding. Meta also guarantees $41.5bn of residual value on its Louisiana and Texas data centre ventures. It records no liability, saying payments are "not probable".
CoreWeave's debt and cash demands
CoreWeave's debt is mostly recourse. Its 10-Q for 30 June puts $31.4bn of $35.1bn of debt, 90 percent, with recourse to CoreWeave Inc, meaning the parent is liable.
Collateral splits that debt. The 10-Q shows $13.6bn of delayed draw term loans backed by contract assets and pledged cash flows. It also shows $16.6bn of unsecured senior and convertible notes.
Interest takes a large share of revenue. Net interest of $640m took 25 percent of Q2 revenue of $2.6bn and was 13 times the operating loss.
Near-term repayments put pressure on cash. Principal due in the rest of 2026 and 2027 is $10.6bn, against $5.5bn of cash and $10.0bn of undrawn facilities.
The bulls point to the backlog, which CoreWeave's chief executive told staff more than covers the debt. Backlog is revenue, not cash. Of the $103.7bn, 41 percent falls within 24 months, and Meta's order alone is worth up to about $21.0bn. Nvidia has agreed to buy unsold capacity through 13 April 2032.
A report on 15 October put bonds issued in April near a 15 percent yield.
When the financing faces a test
More than three fifths of the $97.5bn headline is an ATM programme for which Meta has not entered into an agreement. It does not expect to start before the first quarter of 2027. By 19 November 2027, when the forward contracts must settle, Meta will have shown whether it needed the cash. The first test of Broadcom's support comes after Anthropic's chips start arriving in 2027.