Thursday, November 5, 2026

@convequity Oct 27 1 click

Convequity on X

$AVGO could find it worthwhile to stand behind the chips in Anthropic's $63bn financing if the chip sales it enables are profitable enough. On October 26, $BX and three banks announced $63bn of committed financing for a new special purpose vehicle. The vehicle buys AVGO AI accelerators and networking equipment and leases them to Anthropic. Deliveries are expected from calendar 2027 under a compute agreement AVGO had already announced. The debt has two layers. First-lien lenders have the first claim on the vehicle's assets if it defaults. Second-lien lenders are paid from whatever remains after them. The banks arrange the first lien. BX is the sole provider of the committed portion of the second lien. AVGO provides residual value support to the vehicle for an amount equivalent to the first-lien portion, meaning it stands behind the future value of the equipment for that amount. The release gives no loan split and no payment terms. Reuters, citing two people familiar with the deal, puts the first lien at about $43.5bn, or 69% of the total. The support is a promise about the equipment's future value, and the conditions under which AVGO would pay are not disclosed. Its economic cost to AVGO is a weighing of how likely a payment is and how large it could be. A second factor is the cash or borrowing capacity AVGO has to keep available to honor the promise while it stands. If the promise lets Anthropic finance chips it would otherwise have delayed or not bought, and if those chips sell at a profit, the gross profit on them belongs to AVGO. Gross profit means the sale price less the cost of making the chip, before research and other operating costs. Whether any sales are extra in that sense is not disclosed, and neither is the deal's gross profit. That comparison explains why a chip vendor could take a risk a lender might refuse. A lender earns interest and fees on the loan. AVGO could earn the profit on the extra chips as well, and if that profit outweighs the likely payments and the cost of keeping capacity available, the support adds value for AVGO. The weak point is that the costs and the profit move together. The equipment loses resale value when demand for AI accelerators falls, and AVGO's own chip sales would fall in the same conditions. BX's second lien sits below the senior layer that AVGO's support is sized to. BX is therefore lending mainly against Anthropic's ability to pay its leases. Reuters reported on October 16, citing the Financial Times, that Anthropic was then offering BX a yield above 10% on $9bn of debt backed by five-year lease payments. Reuters could not verify that report, and the final yield is undisclosed. If other lenders are charging more for AI lease risk, or declining it, BX gets paid for taking it. Whether that pay covers the risk depends on lease terms that are not public. The same reasoning can apply further up the supply chain. A supplier could stand behind the value of its own equipment if its gross margin on a deployment is large enough to cover the likely payments, it has the capital to keep available, and the support terms are ones a lender can enforce. If credit for AI data centers stays tight, that is one way the buildout keeps getting financed, with suppliers carrying part of the risk that their own hardware loses value.

@convequity Oct 27 1 click

Convequity on X

At similar valuations we prefer $AVGO over $NVDA, because Broadcom has more room to beat expectations. A custom-chip order still needs lasers, optical and electronic chips, and packaging, and Broadcom supplies all of them. Separate suppliers each protect their own margin, so cutting total system cost is harder. Broadcom could also win custom-chip orders by assuring customers that the optical components needed to deploy them will be available. Google TPU volume adds a second large revenue source. Estimates put Google's TPU-related contribution at roughly $11 billion to $13 billion in 2025. Supply-chain estimates put Google's TPU v8 shipments at about 4.0 million units in 2026, rising to about 9.1 million in 2027. Assuming Broadcom supplies the remainder after MediaTek's allocation, that leaves a large expansion for Broadcom. Nvidia starts with a much larger share, so more of its business is exposed as customers develop alternatives.

@ACapitalLP Oct 27

A Capital on X

Also interesting given the increasing amount of M&A in the BDC sector…. See $ARCC / $MFIC today… https://t.co/ZiVFAiOxKD

@InvestSpecial Oct 27 1 click

Dalius - Special Sits on X

$NDLS quite a move yesterday https://t.co/FKjdXY4Zqn

@StableBread Oct 27 1 click

Fajasy on X

As Mr.Bread, and naturally an expert, I support this statement $TOST https://t.co/H7jOzX4JXU

@BarbarianCap Oct 26 1 click

Barbarian Capital on X

Whirlpool Plunges After Cutting Outlook For Third Time This Year $WHR https://t.co/nUQlDY6feL

@BarbarianCap Oct 26 1 click

Barbarian Capital on X

One-Day Wipeout Tops 60% For the Hardest-Hit Brazilian Stocks $EWZ https://t.co/ncyMLXLg4H

@ACapitalLP Oct 26 3 clicks

A Capital on X

Interesting special situation in $AKER.NO, which owns ~23% of Nscale. Despite the carnage in neoclouds, the FT reported last week that Nscale may still be targeting a $30–35bn IPO before year-end. What makes this interesting is the valuation disconnect. At ~NOK 1,150, backing out Aker’s other holdings and applying its historical ~22% HoldCo discount implies an ~$11bn valuation for Nscale. Below its $14.6bn March round and well below the proposed IPO range. In September, Third Point led a $3.36bn pre-IPO convertible financing alongside Nvidia, Apollo, Citadel and others. The notes reportedly convert at a double-digit discount to the IPO price, with a $30bn valuation cap on the conversion price. Not exactly a group of unsophisticated investors… At a $25–30bn IPO, I get ~27–39% upside assuming some HoldCo discount compression. Even at a $15bn IPO, the downside looks relatively contained under a historical discount assumption. Obviously the IPO could slip, financing and execution risks are enormous, and the broader neocloud unwind isn’t helping. But you can partially hedge the sector exposure with $CRWV / $NBIS shorts, leaving a more isolated bet on the IPO valuation and HoldCo discount...