Broadcom Inc. (NASDAQ:AVGO) CEO Hock Tan has an unusual way of explaining why the company is helping finance Anthropic‘s and OpenAI‘s AI infrastructure buildout: he compares them to two geniuses stranded in the middle of Mongolia who need help getting to college.
Financing Two “Geniuses”
On the company’s third-quarter earnings call on Wednesday, Tan said only two of Broadcom’s six major AI chip customers need financing, with Anthropic and OpenAI needing outside capital to keep pace with the costs of their growth.
“With these two guys, Anthropic and OpenAI—I mean, this is like thinking of… you have two geniuses in the middle of Mongolia, and they need to go to college to fulfill where they want to,” Tan added.
That support flows through Broadcom’s XPV platform, a financing vehicle launched in June with Apollo Global Management (NYSE: APO) and Blackstone Inc. (NYSE: BX) specifically to back Anthropic and OpenAI.
The company has already closed a $35 billion first tranche tied to Anthropic’s initial 1-gigawatt deployment.
‘A Hell of a Business Model‘
Tan said each gigawatt of compute that Anthropic and OpenAI deploy could generate roughly $30 billion in annual revenue for those companies, calling it “a hell of a business model” and the reason Broadcom is willing to help finance the buildout rather than require cash upfront.
He added that the Claude maker is on track to overtake Alphabet Inc.‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google as Broadcom’s largest customer for custom AI chips in 2027, sustaining that lead through 2028, even as Google’s own chip orders continue to grow.
Tan also called Anthropic’s expected IPO “an open secret,” noting that once the company goes public, “its investment credit will change.”
Dario Amodei-led Anthropic could go public later this year, while Sam Altman‘s OpenAI confidentially filed draft IPO paperwork with the SEC in June, though it could reportedly wait until 2027 before going public.
Beat and Raise
Broadcom posted third-quarter revenue of $29.59 billion, beating analyst estimates of $29.36 billion. The company reported adjusted earnings of $3.32 per share for the quarter, beating estimates of $3.24 per share, according to Benzinga Pro.
It expects fourth-quarter revenue of approximately $34.8 billion versus estimates of $35.03 billion.
Price Action: Shares closed 0.66% lower on Wednesday at $367.24 and fell 0.82% in extended trading.
Benzinga edge rankings indicate Broadcom’s stock has a Momentum score in the 50th percentile and Growth score in the 31st percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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