Anthropic’s IPO filing shows the risky financing needed to achieve its compute goals

Anthropic CEO Dario Amodei has written about creating AI powerful enough that it will be like “having a country of geniuses in a data center.” But the company’s recently-unveiled IPO prospectus sheds new light on the kind of precarious financing Anthropic will require to turn that vision into reality.

This week the company updated its prospectus to include its third quarter financial results, which showed a squeeze on the company’s margins as computing costs have risen. The company also revealed additional data center spending commitments. The company has now pledged to spend a whopping $895.4 billion stretching out to 2045.

Some of the companies selling Anthropic the chips and cloud services it needs are also helping it finance those very same purchases. Broadcom has agreed to absorb losses under a $63 billion equipment-financing arrangement if Anthropic defaults, with its maximum potential liability reaching about $43 billion once the equipment is deployed.

Such backing helps Anthropic obtain computing capacity without paying the full equipment cost upfront. Google and AMD also tie some funding to Anthropic leasing or deploying their hardware. Suppliers providing guarantees could face payouts to lenders and developers they backstop just as weaker AI demand reduces their own sales and market valuations.

Who bears the risk?

In the $63 billion transaction announced on Oct. 26, Bank of America, Citi, Morgan Stanley and Blackstone will finance a newly formed company that buys Broadcom chips and networking equipment and leases them to Anthropic. Deliveries are expected to begin in 2027. Anthropic will pay rent for those chips over time, providing the income financiers rely on to recover their investment. 

If Anthropic defaults on its lease, however, Broadcom has agreed to cover the difference between 72.5% of the amount still owed under the lease and what the equipment sells for. For example, if $100 remains owed and the equipment sells for $60, Broadcom would pay $12.50. 

Gil Luria, the head of technology research at D.A. Davidson tells Fortune that Broadcom basically has to cut a deal like this in order to make sure it doesn’t lose sales to rival Nvidia, which has also offered to backstop some of its biggest chip buyers. “In order to stay competitive with Nvidia’s support of its customers, other large semis companies like Broadcom and AMD have had to step in to support their customers as well,” Luria said. Luria upgraded Broadcom to buy on Oct. 27. 

Financiers’ ability to recover money after a default also depends on whether other customers can use the chips. Comparing Nvidia GPUs with Google’s specialized AI chips, known as TPUs, which are built by Broadcom, Andrew Giudici of credit-rating agency KBRA told Fortune, “Custom TPUs generally have greater re-leasing risk than Nvidia GPUs because they are designed for a more specialized ecosystem and have a narrower pool of potential users”.

Residual-value support, such as Broadcom’s agreement,  can help financiers recover money when equipment cannot be sold or re-leased for as much as expected, Giudici said. “However, it effectively transfers a portion of that risk to the support provider.” That makes the supplier’s creditworthiness, the enforceability of its commitment and the extent of its coverage important to assessing the financing, he said.

Cash-rich suppliers with substantial businesses outside AI have capacity to absorb losses, Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia Business School, said. But weaker AI demand could hit those partners’ hardware sales, cloud revenue and investment values at the same time as calls on their guarantees. “Separate contracts can transmit the same underlying demand shock across multiple balance sheets,” he said. “Individual loans can become safer while the broader system becomes more concentrated but also harder to assess.”

Anthropic’s IPO filing says its ability to expand computing capacity may depend on a small number of cloud providers, partners and financiers remaining willing and able to support them. Two of the most important, Amazon and Google, are also spending more cash on their own AI buildouts than their operations bring in. Amazon reported negative free cash flow of $42.4 billion over the preceding 12 months, primarily because of increased AI-related equipment investment. And Google’s parent Alphabet free cash flow was negative $9.1 billion in the third quarter. Both still generate substantial cash and can borrow readily, but their spending means that continued support for Anthropic increasingly competes with their own buildouts for capital.

CEO Dario Amodei has described how an AI company could grow extraordinarily quickly and still buy more computing capacity than it could afford. In a February interview with podcaster Dwarkesh Patel, he illustrated the financial danger with a hypothetical company buying computing capacity on the assumption that revenue would grow tenfold annually. Even fivefold growth could leave it unable to afford what it had ordered. The market could become enormous and still develop too slowly for the purchases made in anticipation of it. “If you’re off by a couple years, that can be ruinous,” he said.

Complex funding conditions

Under a March 2026 agreement, Anthropic can issue up to $42 billion in convertible notes to Broadcom to cover eligible quarterly rent, preserving cash it would otherwise need to pay out. Interest increases the debt, and the holder can choose to convert it into Anthropic shares at a discount.

Notes issued under the facility normally carry 9% interest, with the interest added to the debt, and with the notes deemable for stock at 90% of the market price. But notes issued when specified revenue conditions are unmet carry a 13% interest rate and convert at 85% of market price, giving noteholders more shares for each dollar and further diluting existing shareholders. Sustained failure to meet the agreement’s conditions can end access to further funding. Anthropic says the revenue-growth thresholds are significantly below its recent actual growth rates. The company reported 45% quarterly revenue growth in its third quarter financial results, and a year-over-year growth rate in excess of 1,000%. 

Google and AMD also tie funding to hardware commitments: certain Google funds become available as Anthropic takes on TPU lease obligations, while AMD’s investment becomes available as its GPUs reach delivery and deployment milestones. 

“Hardware-linked equity investments expose Amazon and AMD without making them blanket guarantors,” Van Nieuwerburgh told Fortune. If Anthropic cannot pay, Broadcom and Google bear losses within their backstops’ contractual limits, while lenders retain the uncovered risk, he said.

Anthropic says it has spent years enabling Claude to run across Amazon, Google, Nvidia and AMD chips, allowing it to allocate work according to price and performance. But funding attached to one supplier’s equipment does not automatically follow it to another. That could make it difficult for Anthropic to continue to be as flexible as it has been in which kind of chip it chooses for which workload. 

IPO cash could buy Anthropic more flexibility

Anthropic reported $146.6 billion in liquidity at September 30, including cash, short-term investments and available bank credit. That gives it substantial resources to meet payments and fund expansion, although the bank credit would add borrowing if drawn.

Trzcinka sees that liquidity as a positive for bondholders, but said whether Anthropic achieves an investment-grade rating for its debt “will depend on how the rating agencies assess its substantial future commitments, short operating history, and deeply interconnected relationships.” 

“The company has now disclosed its commitments, which are larger than we initially estimated at $895 billion, compared to our prior estimate of roughly $600 billion,” he said. His view is that those commitments and relationships would limit its ability to obtain financing at investment-grade spreads – the relatively low premiums over benchmark interest rates typically paid by investment-grade borrowers.

“The key question is whether revenue can compound fast enough to absorb the future commitments and outpace compute cost,” he said. He is watching whether Anthropic takes on additional commitments and how its liquidity holds up. “Draws on the revolver [credit facility] would also be a potential warning sign,” he said.

Through Anthropic Direct, a program under which Anthropic plans to build out its own cloud computing infrastructure, the company separates its commitments to data-center space from the larger investment in the chips that will run inside those data centers, giving it more time to assess demand before ordering equipment. It can reserve dedicated facilities operated by third parties on its behalf, then make the chip investment later. Data centers take longer to prepare than the equipment they house, the filing says. As the dedicated infrastructure comes online, Anthropic says it can replace the more expensive short-term compute with lower-cost, long-term capacity.

In the representative AI data-center project modeled in Van Nieuwerburgh’s paper, computing equipment and related systems account for roughly two-thirds of the initial cost, with the facility and power infrastructure making up the rest. 

The data-center commitments Anthropic makes before buying chips can still leave it paying for space that demand may not fill. A facility with secured power “could certainly become a stranded asset if data center demand ultimately disappoints,” Van Nieuwerburgh said, meaning it could be left without enough business to justify its cost and no obvious buyer to which the data center can be sold.

Anthropic says reducing its reliance on partners to pay for future facilities and equipment depends in part on obtaining financing from independent sources on its own credit. An IPO would add cash from shareholders that it could use for those purchases without waiting for a particular supplier’s hardware to reach a delivery or deployment milestone. Combined with Direct’s later equipment decisions, independently raised cash could let Anthropic compare hardware and funding options with less need for the company selling the machines to help pay for them.

IPO proceeds could give Anthropic more freedom to choose its hardware and financing. But as Van Nieuwerburgh put it, “Supplier financing supports construction; ultimately, paying for it requires revenue from end customers.