Broadcom’s $60 Billion AI Debt Deal Hides a $370 Billion Question Nobody on Wall Street Wants to Answer

Broadcom is financing the upcoming AI chip deployment through a special-purpose vehicle (SPV) without recording the debt on its books. The SPV purchases chips and leases them back to customers like Anthropic. Analysts estimate the exposure could reach $370 billion by 2029, while Bank of America considers the losses manageable. Nvidia is involved in a similar deal, with a potential exposure of over $500 billion.

The risk arises from the fact that a single AI demand shock could cause all guarantees to come due simultaneously, potentially collapsing the entire industry. Broadcom's current balance sheet is already heavily leveraged due to the VMware acquisition, and the guaranteed exposure sits atop this already levered position. The guarantee is manageable only under favorable conditions where customers can meet their payment obligations.

However, if AI demand grows excessively, there will be no one left to lease to, forcing the SPV to default and the guarantees to come due all at once. The risk is correlated across the industry, making the situation more precarious.