$63 Billion Financing Fuels AI Bets Ahead of Major Earnings

Key Facts

Bank of America, Blackstone, Citi and Morgan Stanley announced on October 26 a $63 billion financing structure to expand computing capacity dedicated to Anthropic using Broadcom technology, a deal that adds to interest in financing AI infrastructure. The announcement came as U.S. stocks ended Tuesday’s session higher, with the Nasdaq leading gains, up 1.18%, versus a 0.60% rise in the S&P 500, according to data reported by Reuters via MarketScreener. The deal links major financial institutions and a chip and networking provider on one side with an AI company on the other. Its structure highlights the reliance of computing capacity expansion on dedicated institutional financing to buy and lease equipment. Deliveries tied to the agreement are expected to begin in 2027, putting its operational impact after the announcement.

The deal will be carried out through a special-purpose vehicle that will buy Broadcom XPU accelerators and networking solutions, then lease them to Anthropic. Bank of America, Citi and Morgan Stanley arranged the senior tranche, while Blackstone alone took on the committed portion of the second-lien tranche. Broadcom provided residual-value support equal to the first tranche, according to the company’s statement. The arrangement defines the roles of the financiers and technology provider in the deal structure, with the purchased assets allocated to Anthropic’s computing needs. Broadcom said deliveries are expected to begin in calendar year 2027.

U.S. consumer confidence rose 7.5 points to 91.7 in October, compared with September’s upwardly revised reading of 84.2, according to the Conference Board. Both components of the index improved: the Present Situation Index increased 8.6 points to 120.4, while the Expectations Index rose 6.9 points to 72.6. An economist at the board attributed the improvement in confidence to better assessments of current and expected business conditions. The economist linked its recovery to a decline in retail gasoline prices from September to October, saying that “the recovery was in line with a decline in retail gasoline prices from September to October.” The economist noted, however, that confidence remained within a long-term downward trend, placing the monthly gains in a broader context of caution.

Consumers’ inflation expectations for the next twelve months fell in October but remained elevated at 5.8%, according to the Conference Board. The higher confidence reading coincided with this measure remaining at a level the board described as elevated, adding an inflation dimension to data released ahead of the Federal Reserve’s meeting. The Fed meets on October 27 and 28, with its press conference scheduled for October 28, according to its calendar. A Reuters report published during the session said markets widely expected rates to remain unchanged on Wednesday after a hike the previous month. The report also said market pricing included at least two further increases by mid-2027, keeping the committee’s decision and guidance in focus for growth stocks.

Reuters reported that semiconductor stocks rose for a third consecutive session through October 27, with the sector index up 62.1% year to date, compared with a 12.8% gain for the S&P 500. Despite that performance, the semiconductor index remained more than 20% below its June 22 closing high. Chuck Carlson of Horizon Investment Services said Anthropic news “gives AI stocks, particularly semiconductors, a nice rebound.” The Associated Press also reported that South Korea’s Kospi rose more than 4% early Tuesday before posting a 3.6% gain at midday; SK Hynix shares rose 7% and Samsung Electronics gained 4.8%. These moves place chip performance within a broader regional rally, alongside the rise in U.S. stocks at the close.

The wave of upcoming announcements comes as about half of S&P 500 companies had reported third-quarter results, with results from 83% of reporting companies beating analysts’ expectations, according to LSEG data cited by Reuters. Microsoft is scheduled to report results for the first quarter of its fiscal 2027 on October 28, while Alphabet’s results are also on Wednesday’s calendar. Amazon is scheduled to report on Thursday. Reuters said results from major companies will test whether AI spending can deliver the expected profits and productivity. Attention therefore turns the following day to both corporate results and the Fed decision, after stocks closed higher and consumers’ inflation expectations fell, while remaining at 5.8%.

Western Digital also provided guidance for the second quarter of its fiscal 2027, saying it expects annual revenue growth of between 66% and 72%. At the midpoint of the guidance range, the company estimated revenue of $5.1 billion and adjusted earnings per share of $5.80. On October 22, the company announced a 17% increase in its quarterly cash dividend to $0.175 per share. Chief Executive Irving Tan said the company was raising the dividend “based on strong customer demand and disciplined execution.” The guidance adds another signal of activity tied to chips and storage as markets follow results from major technology companies, while deliveries under the Anthropic deal are expected to begin in 2027.