TMT Credit Research: AVGO Credit: TPUs, Take Two?

Research evidence excerpt

M

Update

August 5, 2026 02:28 AM GMT

TMT Credit Research | North America

Morgan Stanley & Co. LLC

Lindsay A Tyler

Credit Analyst

AVGO Credit: TPUs, Take Two?

Morgan Stanley is acting as advisor to

What's new: Bloomberg reported August 4th that BX has held early discussions to

Broadcom Inc. (“Broadcom”), in connection with

gauge interest in a second TPU-financing tranche for an unrated AI lab, similar or

its establishment of the AI XPV Platform with

greater in size relative to the ~$35bn first tranche. We are not aware of a deal and

Apollo and Blackstone Credit & Insurance

representatives declined to comment. Still, the report is unsurprising given AVGO’s

Business as initial anchor investors, as

recently announced AI XPV platform with Apollo and Blackstone, intended to

announced on June 9, 2026. Broadcom has

enable >20GW of compute capacity using AVGO XPUs and networking solutions

agreed to pay fees to Morgan Stanley for its

through 2028.

financial services. Please refer to the notes at the

Read-through for AVGO credit — wider spreads, but tail risk still tempers

end of the report.

appeal: Given the initial tranche was described as scalable, we think a second could

also potentially feature residual-value support, reinforcing our view that the AI XPV

platform introduces meaningful contingent balance-sheet risk. While such

obligations may not be treated as economic liabilities nor fully reflected in adjusted

leverage, the potential exposure remains substantial. If a second tranche and the

remaining implied ~17GW platform resemble the first tranche, AVGO’s theoretical

maximum supported exposure could surpass ~$300bn. (Note the ~$480bn high end

of our prior range now appears punitive following APCHIP amortization disclosures.)

We had closed our AVGO bond buy recommendations on these concerns. Since

June-end, AVGO 10Y bonds have widened ~25bp ( Exhibit 1 ) and are now in-line with

the BBB index, which we still do not view as a compelling re-entry point. Residual

tail risk should continue to limit spread compression, particularly with Aa1/AA rated

NVDA trading only ~20bp tighter. Meanwhile, AVGO's ~20-30bp pickup to ~AA

…