Anthropic CEO Dario Amodei once wrote that to create a powerful enough AI, it's as if one has a nation of geniuses within a "data center." However, the company's recently disclosed IPO prospectus further reveals the fragile financing structure required for Anthropic to turn this vision into reality.

This week, the company updated its prospectus to include financial results for the third quarter, which show that as computing power costs rise, the company's profit margins have been squeezed. The company also disclosed more commitments regarding data center expenditures. Anthropic has now committed to cumulative expenditures of up to $895.4 billion by 2045. Some companies that sell Anthropic the chips and cloud services it needs are also helping to finance these purchases. Broadcom has agreed to bear losses under a $63 billion equipment financing arrangement, and if Anthropic defaults, its maximum potential liability could reach about $43 billion after the equipment is deployed.

This support helps Anthropic to obtain computing power without having to pay the full cost of the equipment at once. Google and AMD will also link part of their funds to the leasing or deployment of hardware by Anthropic. Suppliers that provide such guarantees may face claims for compensation from the borrowers and developers they support when weaker demand in the AI market weakens their own sales and market value.

Who will bear the risk?

In the $63 billion deal announced on October 26th, Bank of America, Citibank, Morgan Stanley, and Blackstone will provide financing for a newly established company that will purchase Broadcom chips and network equipment, which will then be leased to Anthropic. Delivery is expected to begin in 2027. Anthropic will pay rent for these chips over time, and this is precisely the source of income upon which the financiers rely to recoup their investment.

However, if Anthropic breaches the contract, Broadcom agrees to cover the difference between 72.5% of the remaining lease debt and the proceeds from the sale of the equipment. For example, if there is still a debt of $100 and the equipment is sold for $60, Broadcom will pay $12.50.

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Whether the financiers can recover their funds after a breach of contract also depends on whether other customers can make use of these chips. Credit rating agency KBRA's Andrew Giudici states that when comparing the dedicated AI chips TPU from Nvidia GPU and Google, the latter, which are manufactured by Broadcom, "usually carry a higher risk of re-lease, as they are aimed at more specialized ecosystems and have a narrower potential user base."

Giudici said that arrangements like the residual value support provided by Broadcom can help financiers recover their funds when the device cannot be sold or re-rented at the expected price. "However, this actually shifts some of the risk to the supporters," he said. Therefore, when evaluating such financing, the supplier's creditworthiness, the enforceability of their commitments, and the coverage scope are all very important.

A professor of real estate and finance at Columbia Business School, Stijn Van Nieuwerburgh, stated that suppliers with ample cash and a large amount of business outside of AI have the capacity to absorb losses. However, if demand weakens in AI, it could trigger their guarantee responsibilities when the hardware sales, cloud revenue, and investment value of these partners are all impacted. "A single contract can transmit the same underlying demand shock across multiple balance sheets," he said. "An individual loan may become safer, but the entire system will become more centralized and more difficult to assess."

The IPO document states that its ability to expand computing power may depend on whether a few cloud service providers, partners, and financiers are still willing and able to provide support. The two most important partners, Amazon and Google, are also investing more cash in their own construction than in operational activities. Amazon reported that its free cash flow was negative $42.4 billion over the past 12 months, mainly due to increased investment in AI related equipment. The parent company of Google, Alphabet, had a negative free cash flow of $9.1 billion in the third quarter. Although both companies still generate a large amount of cash and can easily borrow, these expenditures mean that continuing to support Anthropic will increasingly compete with their own construction for capital.

The CEO, Dario Amodei, once described how a company from the AI sector could grow extremely fast yet still decide to purchase more computing power than it can afford. In an interview with podcast host Dwarkesh Patel in February of this year, he used a hypothetical company as an example: if the company assumes its revenue will grow tenfold each year, it would proceed to buy more computing power. Even if revenue only grows fivefold, it might still be unable to afford the resources that have already been ordered. The market size may become enormous, but the pace of development could still be slower than that of making advance purchases. “If you fall behind by a few years, that could be catastrophic,” he said.

Complex financing conditions

According to an agreement in March 2026, Anthropic may issue up to $4.2 billion in convertible notes to Broadcom to cover eligible quarterly rent payments, thereby retaining the cash that would otherwise have been required to be paid. The interest will increase the debt, but holders have the option to convert it into Anthropic shares at a discount.

The notes issued under this financing instrument typically have an annual interest rate of 9%, with the interest being included in the debt, and can be converted into shares at 90% of the market price. However, for notes issued when specific revenue conditions are not met, the interest rate is 13%, and conversion is done at 85% of the market price. This means that note holders can obtain more shares for each dollar invested, thereby further diluting existing shareholders. If the agreement conditions are continuously not met, Anthropic will not be able to continue to access subsequent funding. Anthropic indicates that these revenue growth thresholds are significantly lower than the company's actual recent growth rates. In its third-quarter financial report, the company disclosed that quarterly revenue increased by 45% year-over-year, with an annualized growth rate exceeding 1000%.

Google and AMD will also link financing with hardware commitments: as Anthropic assumes the leasing obligations of TPU, a portion of the Google funds will become available; whereas the investment in AMD will be released as its GPU reaches delivery and deployment milestones.

Van Nieuwerburgh to Fortune states: 'Equity investments linked to hardware expose Amazon and AMD to risks, but they do not make them full guarantors.' If Anthropic is unable to make payments, Broadcom and Google will bear the losses within the contractual limits of their respective repurchase/guarantee arrangements, while the lenders will still have to bear the uncovered risks,' he said.

Anthropic indicates that for many years, the company has enabled Claude to run on chips from Amazon, Google, Nvidia, and AMD, allowing for the allocation of tasks based on price and performance. However, financing that is tied to equipment from one supplier does not automatically transfer to another supplier. This may make it more difficult for Anthropic to decide which type of chip to use for which type of workload as flexibly as in the past.

IPO cash or can bring more flexibility to Anthropic

According to Anthropic, as of September 30, the company's liquidity amounted to $146.6 billion, including cash, short-term investments, and available bank credit lines. This provides sufficient resources for the company to fulfill its payment obligations and finance expansion. However, if bank credit lines are utilized, it will also increase borrowing.

Trzcinka believes that this liquidity is beneficial for bondholders, but whether the debt of Anthropic can obtain an investment-grade rating "will depend on how rating agencies assess its substantial future commitments, its relatively short operating history, and its highly interwoven relationships."

"The company has now disclosed that these commitments are on a larger scale than we initially estimated, amounting to $895 billion, whereas our previous estimate was around $600 billion," he said. He believes that these commitments and relationships will limit the company's ability to obtain financing at investment-grade spreads—that is, the premium that investment-grade borrowers typically pay over the benchmark interest rate.

"The key question is whether revenue can grow at a fast enough rate to absorb future commitments and outpace the cost of computing power," he said. He is paying attention to whether Anthropic will take on more commitments and how its liquidity will be maintained. "Utilizing the revolving credit line [credit facility] could also be a potential warning sign," he added.

Through Anthropic Direct — which includes the Anthropic plan to build its own cloud computing infrastructure — the company separates its commitment to data center space from its investment in larger-scale chips, thereby having more time to assess needs before placing orders for equipment. The company can reserve dedicated facilities to be operated by third parties in advance, and then make chip investments later on. According to the prospectus, the preparation time for a data center is usually longer than that of the equipment within it. As the dedicated infrastructure goes online, Anthropic indicates that it is possible to replace more expensive short-term computing power with long-term computing power at a lower cost.

Before purchasing the chips, Anthropic's commitments to the data center may still result in the company paying for space that may not be fully utilized. Van Nieuwerburgh stated that facilities with locked-in power "could certainly become stranded assets if the final data center demand falls short of expectations," meaning there might not be enough business to justify the costs, and there are no obvious buyers ready to take over.

Anthropic indicates that reducing dependence on partners to pay for future facilities and equipment depends in part on whether it is possible to obtain financing based on one's own credit from independent sources. IPO will bring in cash from shareholders, which the company can use to purchase equipment without having to wait for a certain supplier to reach delivery or deployment milestones. Combined with subsequent equipment decisions for the Direct project, independently raised cash may give Anthropic more flexibility in choosing hardware and financing methods, without always relying on the companies selling the machines to help cover the cost of the machines themselves.

The gains from IPO may perhaps give Anthropic more freedom when choosing hardware and financing methods. But as Van Nieuwerburgh said, "Supplier financing supports construction; in the end, it is still the revenue from end customers that will pay for it."