Most of the biggest private credit deals ever have gone to buyouts, real estate, or weak firms. The next one is going to a chipmaker.
Apollo and Blackstone are eyeing a $35 billion deal for Broadcom. The cash is meant for the firm's AI chip push, per Bloomberg.
Private credit is what it sounds like. Loans made by non-bank firms straight to big companies.
These lenders are mostly large asset managers. Apollo and Blackstone are the two biggest names in the space.
Broadcom would normally lean on a group of banks or the public bond market for cash this big. Going private credit instead means quicker funding, looser terms, and far less public review.
The cash behind AI is now too big for a normal bank to absorb on its own. Apollo and Blackstone aren't just lenders here.
They're filling a gap that even the biggest banks can't cover alone. Private credit has tripled in size over the past five years, and AI is part of why.
Broadcom is the second-biggest winner from the AI chip boom after Nvidia. It builds custom chips for the largest cloud firms, like Google and Meta.
It also has an $18 billion deal with OpenAI for custom chips that will run ChatGPT.
That OpenAI deal is also where the pressure shows. Broadcom told OpenAI it would not fund the full chip rollout unless Microsoft buys around 40% of the chips.
A $35 billion credit line gives Broadcom more room to fund its AI plans. It also lets the firm avoid leaning on its own clients to cover the buildout.
The chip business is cash hungry. New chip designs cost billions. New plants cost more. New tools to test and pack the chips cost more again.
Broadcom shares popped about 4% on the news, ticking near $430. For investors, the deal is a window into how AI gets paid for now.
Apollo's assets under management just topped $1 trillion. Blackstone is rolling out a $1.75 billion IPO for a data center REIT (real estate investment trust).
Both firms are setting up for an AI buildout that looks more like utility funding than tech funding. Long-dated loans. Steady payouts. Bigger size than most banks want to take on alone.
For investors, the message is clear. The next leg of the AI trade is being paid for by the same firms that fund pipelines and toll roads.
A $35 billion credit deal to fund AI chip work would rank among the largest private credit deals ever done. The talks are still in motion.
If it closes, it puts a price tag on what the market already knew. The AI buildout has outgrown the old way of funding big tech.
For Apollo and Blackstone, deals like this also lock in steady income for years. That's what their fund backers want. For Broadcom, it's room to keep building chips at the pace AI now demands.
Watch for the size of the final deal. If it lands at or above $35 billion, it will set a new bar for how big a single private credit deal can get. That bar matters for the next round of AI funding too.
