Anthropic's S-1 Strengthens the Case for Broadcom's AI Growth

Key Points

• Anthropic's newly filed S-1 shows strong cash, growth, and profitability trends that support its ability to honor a $161.2 billion Broadcom lease commitment.
• As of Sept. 30, Anthropic held about $131.8 billion in cash and short-term investments while revenue surged over 1,200% year-over-year to $33.24 billion.
• Anthropic also carries massive commitments to Google, Amazon, Microsoft, and SpaceX, though a potential IPO delay or lower valuation could reduce available cash.

Investors hit AI stocks extremely hard on Nov. 5, resulting in a sea of red for names across the industry. Markets didn't spare chip giant Broadcom NASDAQ: AVGO; shares fell 10.4%, its largest single-day decline in five months.

Despite this dramatic sell-off, a key regulatory filing has favorable implications for Broadcom’s outlook: Anthropic’s much-anticipated S-1, which the company subsequently updated on Nov. 2. The filings provided the public's first clean look at Anthropic's financials. Broadcom expects Anthropic to become its largest XPU customer in 2027.

Importantly, Anthropic’s cash position, rapid growth, and improving profitability are positive indicators of its ability to make good on its massive commitment to Broadcom.

Anthropic’s $161 Billion Broadcom Commitment

Anthropic has entered into five-year master equipment leases with Broadcom, which will give the company access to tensor processing unit (TPU)-based compute. As previously reported, Anthropic’s rent payments over the life of these leases total around $161.2 billion, excluding interest. This commitment is not only large but also firm, with Anthropic noting, “the Lease Arrangements are non-cancelable by either party during the applicable lease period except by the lessor in the case of a default.”

The risk of default remains important; Anthropic ultimately still needs to have the funding required to make these payments when the bills come due. Fortunately, the company’s financial metrics lend support to the idea that it will be able to meet its obligations, although they certainly do not guarantee it.

Anthropic’s Cash War Chest, Dramatic Growth, and Profitability Gains

As of Sept. 30, Anthropic was sitting on a massive pile of cash. Overall, the firm’s cash, cash equivalents, and short-term investments totaled approximately $131.8 billion. It is likely that this number will move significantly higher following the firm’s IPO. Although the goalposts may be moving, the company is reportedly targeting a $1.5 trillion to $2 trillion valuation, and could raise $100 billion or more.

Anthropic’s sales are also soaring, and its profitability has improved significantly. In the nine months ended Sept. 30, Anthropic’s revenue was $33.24 billion, equating to a huge increase of more than 1,200% year-over-year (YOY).

Furthermore, in the same nine-month period, the company reduced its operating loss by more than 75% versus 2025, with the figure dropping from -$5.22 billion to -$1.26 billion. This moved the company’s operating margin from -205% to just -4%. Additionally, adjusted operating profit was positive in the first nine months of 2026, at $4.08 billion, or a 12% margin, compared to a -123% margin in the same 2025 period. Anthropic also posted positive operating cash flow of $6.57 billion.

While Anthropic still has a long way to go before achieving impressive margins, the steep upward trajectory in its profitability is difficult to deny. However, Anthropic expects its GAAP and adjusted operating margins to fluctuate as it receives delivery of additional compute. In line with this, the company's adjusted operating margin fell from 19% in Q2 to 15% in Q3 as it added $5 billion worth of compute under short-term commitments.

Nonetheless, this generally strong trajectory is promising in terms of Anthropic’s ability to pay Broadcom over the coming years, while its large cash position will help do so as investors wait for more evidence of scaling profitability.

Anthropic’s Hundreds of Billions in Total Commitments

However, Broadcom is far from the only company that Anthropic has huge commitments with. The company also notes commitments with Alphabet NASDAQ: GOOGL subsidiary Google of at least $121.3 billion, at least $110 billion with Amazon.com NASDAQ: AMZN, and at least $44.9 billion with Microsoft NASDAQ: MSFT. Similar to the Broadcom commitment, these agreements are largely non-cancelable.

Anthropic also has an agreement worth up to $120.5 billion with SpaceX NASDAQ: SPCX. However, after initial non-cancelable periods ending in January 2027 and March 2027, “each agreement may be cancelled by either party upon 90 days’ advance written notice.” The company also notes tens of billions in commitments with private neo-clouds Nscale and Lambda. Importantly, all of these commitments extend into at least 2029, and some as far as 2036, spreading payments over many years.

Anthropic’s total commitments are clearly several times larger than the agreement it has in place with Broadcom. Still, its agreement with SpaceX gives it significant cancellable capacity. If Anthropic needed to lower its compute spending, the company is more likely to axe its cancellable agreements before defaulting on its Broadcom leases. And, again, Anthropic’s large cash balance should go a long way in helping it fund its commitments in the near term.

Anthropic’s IPO Timing and Valuation Come Into Question

Overall, Anthropic’s S-1 contained many positives regarding its ability to pay Broadcom. However, Anthropic continuing on its strong profitability trajectory will be a key piece of the puzzle, and something for investors to watch closely.

However, the more immediate issues to watch are the timeline for Anthropic’s IPO and the valuation it ultimately targets. Amid the recent sell-off, reports have emerged that Anthropic could delay its IPO, and that some investors favor a valuation closer to $1 trillion. A lower valuation target could significantly reduce Anthropic’s IPO proceeds, and thus the cash it has available to pay suppliers.

Considering this, a delay could be a smart move given current market volatility, as the company still has a mountain of cash it can use to operate in the meantime.