Broadcom (AVGO) is making big moves in the AI infrastructure game, and investors are paying close attention. The chipmaker is reportedly in talks with private credit giants Apollo Global Management (APO) and Blackstone (BX) for a potential $35 billion financing package to support its AI chip development. If it goes through, this could be one of the largest private credit deals ever — and it would give Broadcom serious firepower to compete in the custom AI chip market.
But it's not all smooth sailing. The company's AI chip partnership with OpenAI has hit a reported $18 billion financing snag. According to The Information, Broadcom wants Microsoft (MSFT) to commit to buying roughly 40% of the chips before funding the initial 1.3-gigawatt deployment. Under the proposed structure, Microsoft would host the chips in its data centers and lease computing capacity back to OpenAI. Broadcom sees Microsoft's purchase commitment as critical to its confidence in repayment, while OpenAI views the project as essential to lowering long-term server costs and improving margins — the company projects more than $200 billion in operational spending through 2029.
Beyond the OpenAI deal, Broadcom has been expanding its AI partnerships with Alphabet's Google (GOOGL), Anthropic, and Meta Platforms (META). These long-term relationships are part of a broader push to become a dominant player in custom AI chips and infrastructure.
Goldman Sachs analyst James Schneider is bullish on the stock, reiterating a Buy rating and a $480 price target. He sees a major tailwind from "agentic AI" — AI agents that can handle tasks like search, shopping, travel, email, and enterprise work. As these agents become more common, global token consumption could skyrocket, driving demand for the kind of chips Broadcom makes. Schneider believes hyperscalers and large language model providers will keep increasing AI infrastructure spending, creating favorable conditions for semiconductor companies like Broadcom.
Broadcom shares were up 0.69% at $432.93 on Monday, trading near their 52-week high of $437.68. The stock has been on a tear as investors bet on the company's AI prospects, and the potential $35 billion financing deal could be another catalyst. But the OpenAI hurdle shows that even the most promising AI partnerships come with complex financing challenges. For now, Broadcom is playing a high-stakes game of chess, and the market is watching every move.
