Apollo, Blackstone Weigh $35 Billion Financing for Broadcom

Apollo Global Management Inc. and Blackstone Inc. are among private credit lenders involved in talks with chipmaker Broadcom Inc. over a roughly $35 billion financing, the latest indication that companies are mobilizing all sources of capital to fund the AI build-out. The financing, which would be one of the largest ever private credit deals, will help Broadcom fund the development of chips for AI tasks, according to people familiar with the matter who asked not to be identified discussing private information. Negotiations with the investment firms are ongoing and terms could change, according to the people. Representatives for Blackstone, Apollo and Broadcom declined to comment. In a regulatory filing in April, Broadcom said it signed a long-term agreement to develop and supply custom tensor processing units, or TPUs, for Google, along with a separate accord to provide networking and other components to be used in Google's next-generation AI racks through 2031. At that time, Broadcom also announced an expanded collaboration with Google and Anthropic, intended to provide Anthropic with access to a further 3.5 gigawatts of next-generation TPU-based AI compute capacity through Broadcom starting in 2027, subject to Anthropic's continued commercial success. The companies are in discussions with financial partners to support the deployment, Broadcom said then. If the financing deal goes ahead, it would cement the private credit industry's role as a key engine for AI's vast infrastructure requirements. Last year, Meta Platforms Inc. sealed an almost $30 billion financing package with Blue Owl Capital Inc. and Pacific Investment Management Co. for its data center site in rural Louisiana. As an investment-grade firm, Broadcom is a less conventional borrower for private credit, an industry that's known to lend to lower-rated companies. But increasingly, leading private capital firms are targeting blue-chip corporations. Apollo has signed several multi-billion dollar deals with high-grade firms in recent years, including Electricite de France and Intel Corp. Apollo has previously said that investment-grade opportunities could help push the size of the overall private credit market to $40 trillion. Broadcom has increasingly hitched its fortunes to the AI boom. The company's valuation has soared in recent years, propelled by agreements to make custom AI chips for firms like OpenAI. Broadcom expects its AI chip sales to top $100 billion next year, Chief Executive Officer Hock Tan said in March. While Nvidia Corp. remains the biggest maker of accelerators -- the chips that help train and run AI models -- Broadcom has positioned itself as an alternative with its custom-made semiconductors. The four biggest hyperscalers -- the largest data center operators -- are expected to spend as much as $725 billion this year on AI data center equipment and related capital, up from earlier forecasts. Earlier this week, Bloomberg reported that Meta is working on a financing package for a data center in El Paso, Texas, that could total roughly $13 billion. Blackstone was an early backer of AI infrastructure, having bought data-center builder QTS in 2021. It's since made AI a central bet, investing across its real estate, infrastructure, private equity and asset-based finance businesses. The firm's portfolio now includes more than $150 billion of data centers globally, including facilities under construction, Blackstone Chief Executive Officer Steve Schwarzman said on an earnings callBloomberg Terminal last month. And it continues to grow, with an additional $160 billion in prospective pipeline development, he added.