Alphabet has constructed one of the largest infrastructure financing projects in history, a complex web designed to supply its AI investee, Anthropic, with over $150 billion worth of artificial intelligence chips. Internal sources familiar with the deal and corporate filings reviewed by the media reveal that surging demand from Anthropic forced the tech titan to build an elaborate financial mechanism to provide its proprietary chips to the startup.
The collaboration connects Alphabet, Broadcom, Apollo Global Management, Blackstone Group, Morgan Stanley, and several cryptocurrency mining firms, forming a dense transaction network spanning chip manufacturing to data center construction. The core of the project is Google's Tensor Processing Unit (TPU), an AI chip co-developed with Broadcom since 2016.
Previously used primarily in Alphabet's own data centers, these chips are now being sold externally, challenging Nvidia's dominance in the AI processor market. Alphabet delivers the systems in "pods," server racks taller than a person that integrate thousands of chips into a single unified computing cluster. A senior banker deeply involved in the transactions stated that AI chips are among the most valuable commodities ever produced, noting the unprecedented scale of the operation.
The total value of contracts under this financing framework is approximately $200 billion, with details never before fully disclosed. The case reveals a new AI financing model, where large tech companies are pushing far beyond traditional capital expenditure, binding more financial system resources to AI industry growth.
To support the explosive demand for AI chips, Alphabet, Broadcom, and Wall Street investors each share different financial risks. Alphabet provides guarantees for data centers; Broadcom commits to purchasing chips and assists with financing; Apollo and Blackstone provide the bulk of private credit funds, buying hardware upfront and leasing it to Anthropic. An Alphabet executive involved in the project explained that every party is using its own balance sheet to take on responsibility, with Alphabet handling the data center side and Broadcom handling the chip side.
The total contract value supporting the entire collaboration is about $200 billion, with roughly four-fifths related to chip procurement, making it one of the largest infrastructure financing projects ever. A major challenge for such a massive project is that no participant wants to carry tens of billions of dollars in AI chip inventory on its own balance sheet.
Alphabet's capital expenditure is already at an all-time high, so Broadcom agreed to purchase the AI hardware from Alphabet. However, Broadcom also wants to invest its capital elsewhere. A source said Broadcom is taking on the financing role but has no intention of deeply engaging in the financing business. This contradiction led to a unique solution.
Morgan Stanley led the creation of a private credit vehicle funded by external investors to purchase the chips and lease them to Anthropic. The model is adapted from the vendor financing structures used by Boeing and General Electric to sell aircraft and jet engines. In June, the first batch of TPU hardware was transferred from Alphabet through Broadcom into this financing structure.
Sources say a special purpose vehicle (SPV) named Compute raised $35 billion to purchase approximately 1 gigawatt of AI hardware, corresponding to roughly 1 million TPU chips. The SPV's funding came from three tranches of debt financing, led by Apollo Global Management and Blackstone. Broadcom provides a guarantee for two of the senior debt tranches: if Anthropic stops paying rent and the SPV's sale of hardware is insufficient to fully repay senior investors, Broadcom pledges to cover the shortfall. This mechanism, known as a residual value support arrangement, covers about $300 billion of the $35 billion financing. As Anthropic continues to pay rent, Broadcom's risk exposure will gradually narrow. This structure will serve as a template for future trillions of dollars in TPU hardware financing.
The largest deal to date was finalized in April: Alphabet agreed to sell an additional 3.5 gigawatts of TPU hardware to Broadcom for Anthropic's deployment. Broadcom's filings disclose it has reached $128 billion in purchase commitments, with $55.2 billion scheduled for delivery in fiscal 2027 and $72.9 billion in fiscal 2028. Sources familiar with the agreements say these purchase commitments almost entirely correspond to its agreement to buy the 3.5 gigawatts of TPU hardware from Alphabet.
Solving the chip financing problem only solved half of Alphabet's challenge. The company still needed data centers with sufficient electricity to house the hardware. The Alphabet executive stated that with a clear delivery timeline, they are actively seeking computing sites that can match the construction schedule, noting that crypto mining companies with surplus power resources have been a great help. This collaboration has driven several crypto mining firms with stable power supplies to transform into a new generation of AI infrastructure developers.
Smaller firm TeraWulf was the first to receive an Alphabet guarantee, planning to build a new 360-megawatt data center on its own campus in upstate New York for Anthropic's use. Alphabet provides a guarantee for the rent payment on the site. Morgan Stanley used this as a basis to issue construction bonds, raising $3.2 billion in October for the project. As compensation for the guarantee, Alphabet received cheap warrants, allowing it to hold a stake in TeraWulf.
Comments