Broadcom Inc. (AVGO) stock is trading nearly 2% lower in Thursday's premarket session as rising Treasury yields and broader weakness in technology stocks weigh on investor sentiment.

Nasdaq futures fell 0.78%, while S&P 500 futures declined 0.56%, signaling a weaker opening for Wall Street.

The decline comes as Broadcom expands its role in the artificial intelligence infrastructure boom. The company is combining custom AI chip development with large-scale financing arrangements to help customers fund costly computing projects.

However, investors are weighing the financial risks tied to Broadcom's growing AI financing commitments as higher borrowing costs put additional pressure on technology stocks.

Broadcom Explores $50 Billion OpenAI Financing Deal

Broadcom is reportedly in early discussions to arrange more than $50 billion in financing to support OpenAI's purchases of custom AI chips developed by the two companies.

The proposed deal could involve about $30 billion in debt and build on Broadcom's financing partnerships with Apollo Global Management, Inc. (APO) and Blackstone Inc. (BX).

The company's broader AI financing platform aims to support more than 20 gigawatts of computing capacity through 2028. Bloomberg reported the development Wednesday, citing the Wall Street Journal.

The financing would allow OpenAI to spread infrastructure costs over time rather than pay the full amount upfront. It could also help Broadcom secure long-term demand for its custom chips.

OpenAI is expected to become Broadcom's second-largest custom-chip customer.

Anthropic Deal Highlights Broadcom's Financing Ambitions

Broadcom is already supporting a $60 billion financing package tied to Anthropic's use of Google-developed tensor processing units, or TPUs.

Wall Street banks began syndicating $42 billion in senior secured loans this week. Another $18 billion in junior debt is expected, with Blackstone committing about $9 billion.

Broadcom is partially guaranteeing the senior financing, helping the transaction attract lenders.

Anthropic has also committed to a five-year, $125.2 billion TPU lease. Broadcom could provide up to $42 billion in convertible financing, covering roughly one-third of that commitment.

The arrangement will give Anthropic access to multiple gigawatts of next-generation TPU capacity starting in 2027.

Anthropic is expected to become Broadcom's largest custom-chip customer that year.

Marvell Challenges Broadcom in Custom AI Chips

Meanwhile, rival Marvell Technology, Inc. (MRVL) is pursuing the same surge in AI infrastructure spending.

At its Tuesday investor day, Marvell projected fiscal 2031 revenue of $70 billion to $90 billion, driven by demand for custom AI chips and high-speed data center connectivity.

The company also expects the custom silicon market to reach approximately $235 billion by 2030.

Chairman and CEO Matt Murphy said current Wall Street estimates imply more than $30 billion in data center revenue for fiscal 2028, more than double earlier expectations.

CNBC identified Broadcom as a major competitor as both chipmakers compete for spending by hyperscalers developing their own AI processors.

Custom chips offer companies an alternative to general-purpose AI processors from NVIDIA Corporation (NVDA). They can also help customers optimize computing performance and costs for specific workloads.

Bank of America Warns of Growing Debt Exposure

Broadcom's financing strategy could accelerate chip sales, but it also introduces substantial financial risks.

Bank of America Securities analyst Tom Curcuruto estimates Broadcom's AI financing vehicle could carry about $370 billion in senior debt by mid-2029 if it reaches 20 gigawatts of capacity.

That projection includes roughly $150 billion in new debt issuance during 2027.

Importantly, the $370 billion represents potential debt within the financing vehicle, not debt directly held on Broadcom's balance sheet.

However, Broadcom guarantees certain customer lease payments. Its initial transaction carries a maximum backstop exposure of approximately $29 billion.

These guarantees could become more significant as the financing platform expands.

The strategy allows Broadcom to support customers' AI spending while strengthening its chip business. However, it also ties the company's financial exposure more closely to customers' ability to meet long-term lease obligations.

Analysts maintain a consensus Buy rating, with an average price forecast of $518.96. Recent analyst actions include:

• Piper Sandler: Initiated coverage with an Overweight rating and a $460 price forecast on Sept. 10.
• Citigroup: Maintained a Buy rating and raised its price forecast to $515 on Sept. 4.
• DA Davidson: Maintained a Neutral rating and lowered its price forecast to $350 on Sept. 4.

Top ETF Exposure

Broadcom is a major holding in several technology-focused exchange-traded products.

• Invesco PHLX Semiconductor ETF (SOXQ): 8.87% weighting.
• MicroSectors FANG+ Index 3X Leveraged ETN (FNGU): 9.97% weighting.
• Pacer Data and Digital Revolution ETF (TRFK): 9.42% weighting.

Broadcom's significant exposure in these products means changes in fund flows could affect demand for its shares. However, the leveraged structure of FNGU adds another layer of volatility.

Price Action

AVGO Price Action: Broadcom shares were down 1.63% at $370.38 during premarket trading on Thursday, according to market data.