Broadcom to buy $1 billion stake in Anthropic placement

Broadcom ↗ 4.57% will buy about $1 billion of Anthropic's stock in a $26 billion private placement that runs alongside the AI developer's initial public offering. The amount comes from Anthropic's amended IPO filing, and it puts the chipmaker among a small group of strategic backers who will be on the shareholder register when trading begins. Anthropic filed Amendment No. 2 to its S-1 registration on Nov. 10, and it lists Broadcom as one of seven cornerstone buyers that agreed "severally and not jointly" to purchase $26.0 billion of nonvoting Class N common stock at the IPO price.yatirimmasasi.com

How the placement is split

The other buyers are Alphabet's ↗ 2.28% Google, Nvidia ↗ 3.53%, Advanced Micro Devices ↗ 7.99%, Micron Technology ↗ 12.29%, Microsoft ↘ 2.46% and TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 4.37%. Bloomberg's Deals newsletter reported the split. Google and Nvidia will each put in $10 billion and AMD $2.5 billion. Broadcom, Micron and Microsoft will each invest $1 billion, or roughly 13.5 million shares at the $74 midpoint, and TSMC will invest $500 million. The placement shares won't be registered in the offering, and they aren't covered by the underwriters' lock-up agreements.cnbc.com+1

Anthropic plans to sell 825 million shares at $70 to $78 each, which would raise up to $64.4 billion. At the top of that range, the company would be valued at about $1.4 trillion on a fully diluted basis. With the placement added, total proceeds could reach $90.4 billion, and trading on the Nasdaq ↗ 0.04% is expected to start Nov. 19 under the symbol "ANT".reuters.com

Broadcom shares climb

Broadcom closed higher on Tuesday after the filing was released, building on a rally the day before. The stock rose again in early trading Wednesday, when Goldman Sachs The Goldman Sachs Group, Inc. ↗ 1.89% added the chipmaker to its short list of top picks and argued that the AI selloff had gone too far. The rebound comes after the Philadelphia Semiconductor Index PHLX Semiconductor Index ↗ 6.05% fell more than 12% in a single session on Nov. 5.ca.finance.yahoo.com+1

The stake is small compared with Broadcom's market value of more than $1.5 trillion. It still strengthens a custom-silicon relationship in which Broadcom helps design AI accelerators and supplies Ethernet networking gear for AI clusters. Broadcom also has a $42 billion note agreement with Anthropic, and it expects the AI lab to become its largest custom-chip customer in 2027.247wallst.com+1

Valuation questions

The IPO's valuation came in below what some investors had expected. "Anthropic could become an exceptionally successful company, but at this valuation, much of that success is already reflected in the price," venture capitalist Varun Datta told Reuters. Jeff Zell of IPO Boutique offered a different view, saying a lower target "allows investors to 'bid up' the IPO rather than facing a take-it-or-leave-it scenario".reuters.com