Broadcom Upgraded By DA Davidson After Anthropic IPO Filing — Analyst Says AI Cycle ‘Isn't Over Quite Yet’

Anthropic’s IPO filing detailed its extensive relationship with Broadcom, including a five-year equipment lease agreement involving approximately $125.2 billion in payments, excluding interest.

• D.A. Davidson raised its price target on Broadcom to $400 from $350 following Anthropic's IPO filing.
• The firm believes successful IPOs by Anthropic and OpenAI could help Broadcom meet its growth expectations over the next couple of years.
• Broadcom CEO Hock Tan reportedly intervened to finalize a $63 billion financing deal supporting Anthropic's AI chip leases.

Broadcom Inc. (AVGO) drew a bullish call from D.A. Davidson on Tuesday following Anthropic's initial public offering (IPO) filing as the firm upgraded the stock to ‘Buy’ from ‘Neutral’.

According to The Fly, the firm believes Anthropic will proceed with its IPO and raise capital, followed by a potential OpenAI IPO next year, which could provide funding that could help Broadcom meet its expectations over the next couple of years.

The firm raised its price target to $400 from $350, saying the artificial intelligence (AI) cycle “isn't over quite yet”, per TheFly. It noted that Broadcom shares are trading as though the probability of both IPOs materializing is “near zero,” leaving significant upside potential if they proceed.

As of this writing, AVGO stock was up over 2% in premarket trading and was among the top-trending tickers on Stocktwits.

Anthropic's IPO Filing Shows Scale Of AI Infra Commitments

Anthropic is seeking to list its shares under the ticker ANT on Nasdaq. The company filed its Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) on Monday.

The filing detailed Anthropic's extensive relationship with Broadcom, including a five-year equipment lease agreement involving approximately $125.2 billion in payments, excluding interest.

Anthropic disclosed an agreement allowing it to issue up to $42 billion in convertible promissory notes to Broadcom or a designated financing partner, if needed, to fund obligations under the arrangement.

Broadcom CEO Helps Secure $63B Anthropic Financing

The Wall Street Journal reported Monday that Broadcom CEO Hock Tan intervened in negotiations to finalize a $63 billion financing arrangement that lets Anthropic lease specialized AI chips developed by Broadcom and Google.

Tan spent nearly two months working with banks to secure more than $40 billion in commitments, per the report. Some lenders considered withdrawing amid concerns that the returns did not adequately compensate them for the risks. Tan held last-minute discussions with bank executives and agreed to higher loan interest rates.

Bank of America, Blackstone, Citi and Morgan Stanley announced Monday that the $63 billion transaction will be executed through a special-purpose vehicle (SPV) that will purchase Broadcom's AI accelerators and networking equipment for lease to Anthropic.

Under the agreement, Broadcom will provide residual-value support to the SPV for an amount equivalent to the first-lien portion of the financing, with equipment deliveries expected to begin in 2027.

Retail Investors’ Sentiment Around AVGO Stock

On Stocktwits, retail investors’ sentiment improved to ‘neutral’ from ‘bearish’ a day ago.

So far this year, AVGO stock has fallen over 5%. By comparison, the State Street Technology Select Sector SPDR ETF (XLK), which holds the stock, has risen over 29% over the same period.

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