$AVGO · Schwab Network · 2026-10-27

Let's focus on the chart for Broadcom stock, which has fallen by more than 30% since hitting an all-time high in early June. Like many other technology stocks, Broadcom's stock was at the center of a huge AI debt deal, announced late yesterday, which involved Anthropic.

Therefore, we are witnessing a remarkable recovery in Broadcom's stock today. The stock desperately needed this recovery after the decline, as we mentioned, since the summer. As I mentioned, Broadcom stock made gains again today.

The stock rose by about 3%. This adds to its 2.3% gains made yesterday after Anthropic announced its initial public offering.

As you pointed out, the past two months have been difficult for this stock. Its price has fallen by more than 30% from its highest levels in June.

But this huge deal and Anthropic's initial public offering could give Broadcom a major boost. This figure alone was enough for DA Davidson to upgrade its rating for Broadcom from neutral to buy.

He adds that these two offerings will enable Broadcom to meet its expectations for the next two years. The analyst also raised the target price for the stock from $350 to $400, which is 21 times his 2027 earnings forecast for Broadcom.

Davidson asserts that Anthropic will play a pivotal role in Broadcom's trajectory over the next few years.

Anthropic is set to purchase 16 gigawatts from Broadcom between now and 2028. Of the total 32.3 gigawatts identified by Broadcom, Anthropic will acquire approximately 50%, giving an idea of the impact this deal will have on Broadcom.

However, it should be noted that Anthropic's acquisition of Broadcom chips is not a simple matter; it is a rather complex deal. The company announced a $63 billion deal, in which Wall Street firms finance the purchase of equipment from Broadcom, which will later be leased to Anthropic.

But the Wall Street Journal reported that CEO Hock Tan spent two months working with lenders, including Bank of America, Citi, Morgan Stanley, and Blackstone, trying to persuade them to provide more than $40 billion in debt, allowing Anthropic to lease those specialized chips from Broadcom and then develop them in collaboration with Google.

Broadcom was working to finalize the deal with Anthropic before filing its initial public offering application, but as the deal approached, according to a Wall Street Journal report, some banks became increasingly concerned about participating, and Broadcom's CEO ended up holding last-minute discussions with executives over the weekend to finalize their commitments and agree to higher interest rates.

As part of this deal, and this is where things get a bit complicated, Broadcom provides a financial guarantee to the lenders that ensures the equipment retains a certain minimum value.

Therefore, if the devices lose value faster than expected or the lease fails, Broadcom will have to bear the loss.

The company is taking on financial risks of up to $43 billion during the first year, although its exposure to these risks will decrease to zero during the 5-year lease term. Truist described the deal as involving "some, but minimal, risk for Broadcom".

She says that the $43 billion peak liability figure is only relevant under conditions that appear to us to be extremely pessimistic.

So, overall, we are seeing a very positive reaction. Davidson adds that the artificial intelligence cycle is not over yet, and that they believe the likelihood of that happening is almost zero.

Broadcom has to meet this financial obligation in case of any problem, which is clearly reflected in the stock's performance, which has risen by more than 5% in the last 48 hours, Sam.

Interestingly, Hock Tan was one of the CEOs who spoke in recent weeks about the possibility that capital constraints would be the next obstacle, and here he is doing all this behind the scenes, and it seems clear that he has no problem completing the deal.

That seems obvious. I think this is the power of Hawk Tan.

Now let's move on to trading with options strategy expert Tim Bigham. Good morning, Tim. So, Broadcom needed this, because its stock price had fallen significantly from its summer highs, as we mentioned and saw in the chart.

Yes, I would certainly view this as a short-term investment, aimed at at least to establish a floor for Broadcom's stock price in the future. It is true that earnings will be released in early December, but we are seeing not only Broadcom and Anthropic, but other companies as well, returning to similar levels.

We saw that with Nvidia and Meta, you know, a couple of days ago. So, we are witnessing a return to activity that seemed to be calming down, or rather, a revival. This winding scenario, where I invest in you and you invest in me, will, in my opinion, continue to support AI stocks, especially Broadcom stocks.

Therefore, I will sell the traditional November put option, the 300 for 295 put option, at a price of about 50 cents. I wouldn't be a bold buyer here, especially with Broadcom's recent surge today, but 300 looks like a good support level.

The stock rebounded well from it, and I think that between now and the earnings announcement, the stock will fluctuate sideways with a slight upward bias.

I don't think we'll see the sharp rises we saw in the first wave of AI stocks, so to speak, but I do think we'll see a slowdown in selling, if not its complete disappearance.

So, I'm a bit of a fan of Broadcom in the short term. As for the long term, nobody knows, that's my real answer. The most important question is how long this funding will take, how much it will cost, and how long it will last.

I think at some point they will have to prove it by generating good revenue. Otherwise, you will see banks and lenders backing away from providing loans, in my opinion.

Good. Yes, this is something worth watching, especially with the growing concerns about financing in the market right now, but it doesn't seem to be negatively impacting performance today.

We are seeing trading within a narrow range, but the stock is still high, and it looks like the technology sector will perform well over the next 48 hours, Tim.