Inside Google’s US$200 billion Wall Street finance machine for Anthropic

To support the relentless surge in demand for Anthropic and AI chips, Google, Broadcom and Wall Street investors have each taken on different pieces of the financial risk. Photo by Omar Marques/SOPA Images/LightRocket via Getty Images

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Surging demand from Anthropic, in which Google is an investor, has led the Big Tech company to orchestrate a sprawling operation to supply its chips to the start-up, according to people involved in the project and corporate filings reviewed by the FT.

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The effort brings together Google, Broadcom, Apollo, Blackstone, Morgan Stanley and a slew of crypto miners in a web of transactions that stretches from chip manufacturing to data centre development.

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At the centre of the project are Google’s tensor processing units, or TPUs — AI chips it has co-developed with Broadcom since 2016. Once used largely inside Google’s own data centres, the chips have begun to be sold externally, challenging Nvidia’s dominance of the AI processor market.

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Google sells the systems in “pods” — server racks taller than a person that connect thousands of chips into a single computing system.

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“AI chips are some of the most valuable goods ever produced,” said a senior banker close to the deals. “It’s a scale like we’ve never seen before because it’s a product we’ve never seen before.”

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The financing arrangements, which tie together contracts worth about US$200 billion, have not previously been reported in full. They reveal how Big Tech is creating funding models for AI that reach far beyond traditional corporate spending and tie more of the financial system to the industry’s growth.

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To support the relentless surge in demand for the AI chips, Google, Broadcom and Wall Street investors have each taken on different pieces of the financial risk.

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Google guarantees the data centres. Broadcom commits to buying the chips and helps finance them. Apollo and Blackstone provide much of the private-credit capital that purchases the hardware before leasing it to Anthropic.

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“This is each of us putting our balance sheet to work,” said a Google executive involved in the effort. “We’re doing it on the data centre side, [Broadcom’s] doing it on the chip side.”

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The web of contracts underpinning these arrangements adds up to about US$200 billion, with roughly four-fifths tied to the chips themselves, making it one of the largest infrastructure financings ever assembled.

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A program of such a size posed a problem: none of the companies involved wanted to carry tens of billions of dollars of AI chips on their balance sheets.

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Google is already funding record capital spending, so Broadcom agreed to buy the AI hardware from it. But Broadcom, too, would rather deploy its capital elsewhere.