Broadcom Stock Falls 21% Amid AI Financing Scrutiny

Broadcom's stock has experienced a notable decline from its recent peak, falling to around $380 after closing at $393 on a recent trading day. This represents a drop of approximately 21 percent from the record close of $481.57 on June 2. The movement comes as investors scrutinize a new financing structure the semiconductor giant has established to support customer purchases of its custom AI chips.

The core of the recent concern centers on the AI XPV Platform, a financing vehicle launched in June in partnership with Apollo Global Management and Blackstone. Bank of America analyst Tom Curcuruto has estimated that this platform could carry up to $370 billion in senior debt by mid-2029. It is important to note that this figure represents a modeled theoretical ceiling for future commitments and does not indicate debt on Broadcom's own balance sheet. According to Broadcom's latest quarterly filing, the company has agreed to backstop customer lease payments for its custom AI accelerators, with a capped maximum potential loss of $29 billion on the platform's first transaction. Bank of America's analysis further suggests that in a worst-case scenario where every customer defaults,...