Apollo Global Management LLC and Blackstone Group LP are in negotiations to provide approximately $35 billion in financing to Broadcom. If finalized, this transaction would rank as one of the largest private credit deals in history. According to reports, the financing is intended to support the development and construction of Broadcom's AI chip business, including a long-term agreement to supply custom Tensor Processing Units (TPUs) for Google. The negotiations are ongoing, and the terms are subject to change. In March of this year, Broadcom's CEO Hock Tan stated that the company expects its AI chip sales to exceed $100 billion next year. Furthermore, securing this financing would further establish the private credit industry as a core funding source for AI infrastructure development. Broadcom's stock rose 3.75% intraday.

The financing, which would set a record, is intended to support the expansion of AI chips like TPUs. This approximately $35 billion financing package has the potential to set a new record in the private credit market. Last year, a nearly $30 billion data center financing agreement between Meta Platforms, Blue Owl Capital, and Pacific Investment Management Company (PIMCO) was previously considered a landmark deal in this market. In an April regulatory filing, Broadcom disclosed it had signed a long-term agreement with Google to develop and supply custom TPUs. It also has a separate agreement to provide networking and other components for Google's next-generation AI racks, with contracts extending through 2031. Additionally, Broadcom announced an expansion of its collaborations with Google and Anthropic, planning to provide an additional 3.5 gigawatts of next-generation TPU computing power for Anthropic starting in 2027. At the time, Broadcom also indicated the parties were in discussions with financial partners regarding deployment support.

With AI capital expenditures soaring, Broadcom is positioned as a core beneficiary. The funding requirements for AI infrastructure are accelerating rapidly. The four largest hyperscale data center operators are projected to spend a combined total of approximately $725 billion this year on AI data center equipment and related capital expenditures, exceeding prior forecasts. Meta is currently preparing a financing package of around $13 billion for its data center in El Paso, Texas. In the AI chip market, Nvidia remains the largest supplier of accelerated computing chips. Meanwhile, Broadcom has positioned itself as a significant market alternative through its custom semiconductor approach. It has signed agreements with companies like OpenAI for custom AI chips, driving a substantial increase in the company's valuation. If the aforementioned financing negotiations are successfully concluded, they would provide crucial funding for Broadcom to further expand its production capacity and deepen its ties with major cloud customers.

Entering the investment-grade blue-chip space, the boundaries of private credit continue to expand. As an investment-grade company, Broadcom is not a traditional client for the private credit market, an industry historically known for providing financing to lower-rated companies. However, leading private capital firms have been accelerating their penetration into blue-chip enterprises in recent years. Apollo has secured multi-billion dollar financing agreements with several high-rated companies in recent years, including partners like Électricité de France (EDF) and Intel. Apollo has previously stated that investment-grade opportunities have the potential to push the overall private credit market size to $40 trillion. For its part, Blackstone's CEO Steve Schwarzman stated during last month's earnings call that the firm's global data center portfolio, including projects under development, now exceeds $150 billion, with an additional approximately $160 billion in potential pipeline projects. Blackstone began positioning itself in AI infrastructure as early as 2021 with the acquisition of data center builder QTS. It has since made this a core investment theme across multiple business lines, including real estate, infrastructure, private equity, and asset-based financing.