Technology Insights: Broadcom Reports Strong Quarter, But Outlook Disappoints; Outlines Multiyear AI Revenue Roadmap; Nvidia Acquires Hugging Face; Anthropic Signs $35B Compute Deal

Equities were under pressure at the start of the week on inflation and rate hike concerns, with the Nasdaq 100 being only slightly positive over the last five days as of Thursday, Sept. 3, morning.

Credit movement was mixed. The Octus Software Bonds and Loans HY Index gained 0.3%, while the Data Center and AI Infrastructure HY Index fell 0.6% and the Tech Hardware HY Index gained just 0.1%. Although this week’s credit moves were not significant across the overall hardware and AI infrastructure sector, Symplr’s second lien loan led the decline within the software peer group, decreasing approximately 4 points over the week. However, its first lien loan was higher on the week by about 3.5 points.

Octus published an analysis on Cornerstone OnDemand, which faces significant financial challenges ahead of an October 2028 maturity wall. Octus also reported that Volta Infrastructure Holdings is encountering market skepticism over its $5 billion debt financing due to concerns regarding its loan-to-value ratio, a lack of corporate guarantees and a short operating history.

Elsewhere this week, Anthropic signed a $35 billion, six-year cloud computing deal with Nvidia-backed Lambda. Broadcom reported record revenue and outlined a multiyear AI revenue roadmap. Meanwhile, Nvidia agreed to acquire Hugging Face for $12.93 billion and Dell’s AI server backlog hit $95 billion on record bookings.
 

Aggregated Pricing Data

Weighted-average yield and weighted-average price moves as of the morning of Sept. 3 across select sub-investment-grade dollar-denominated bonds and loans for the tech sector are shown below:
 

The chart below tracks equity performance across broader tech, as measured by the Nasdaq 100 (NDX) and iShares Expanded Tech-Software Sector ETF (IGV) for broader software.

More specialized exchange-traded funds are included to track semiconductor performance through the VanEck Semiconductor ETF (SMH), cybersecurity performance through the First Trust Nasdaq Cybersecurity ETF (CIBR), AI infrastructure performance through the Defiance AI & Power Infrastructure ETF (AIPO) and cloud software performance via the WisdomTree Cloud Computing Fund (WCLD).
 

Equities were under pressure at the start of the week because of inflation and rate hike concerns with Nasdaq 100 being only slightly positive over the last five days as of Sept. 3 morning. However, IGV and WCLD remained resilient, increasing approximately 4.5% on the week. AI infrastructure and semiconductor equities remained slightly negative as AIPO and SMH declined roughly 2% and 1%, respectively. Despite trading flattish through most of the week, investors saw a slight late-week increase as Treasury yields retreated.

Largest Weekly Price Movers

Software
 

Symplr led the decline within the software peer group as its second lien loan decreased approximately 4 points over the week. Its first lien loans were higher by 3.5 points. Moody’s Ratings downgraded Symplr’s corporate family rating to Ca from Caa2 in July, citing increased likelihood of debt restructuring due to persistent cash flow deficits and high financial leverage.

Precisely Software’s second lien term loan due 2029 continued to plunge following its private earnings results, continuing a selloff in the company’s debt instruments that commenced in January and was amplified by the company’s refinancing struggles in the spring.

Thoughtworks headlined the risers as its first lien term loan rallied 3.7 points over the past week, continuing its streak from a week prior when it rallied more than 9 points. Claritev’s secured notes also increased 3.5 points on the week. Please see Octus’ earnings analysis of its second-quarter results HERE.

Tech Hardware and Data Centers & AI Infrastructure
 

Movement across data centers and AI infrastructure companies was fairly range-bound, as CoreWeave led the decliners, down 2.1 points, with no material movement among risers. That said, Broadcom’s share price decreased more than 4% on Sept. 3 morning, likely due to a slightly softer-than-expected fourth-quarter revenue outlook and margin compression that overshadowed strong AI sales.
 

Credit market activity across the semiconductor, component and other hardware space was minimal this week, though a handful of Xerox bonds increased on the week.
 

Americas

ANALYSIS: Cornerstone 1L Yields 33% Ahead of October 2028 Maturity Wall; Anemic Growth, 8.1x Leverage Point to Tough Refi; Octus Sees 2L Impaired at 5x-7x EV Multiple

Cornerstone OnDemand, a learning and people development software company, is facing significant financial challenges with an October 2028 maturity wall amid overleverage and slow growth in a tough refinancing environment. Despite some cash flow improvement and reduced leverage, the company’s growth remains weak, and rising interest costs are expected to offset its small positive free cash flow. The company’s debt levels are unsustainable, with a net total leverage of 8.1x or 11.1x including preferred equity, and a broader capital-structure transaction is likely needed before 2028.

Volta, JPM Sound Out Investors at SOFR+500 Bps, 98/98.5 OID for $5B GPU Financing

Volta Infrastructure Holdings is facing skepticism over its $5 billion debt financing due to concerns about its LTV ratio, lack of corporate guarantees and short corporate history. The financing, led by JPMorgan, aims to fund graphics processing unit, or GPU, purchases and is being marketed with a loan-to-cost ratio of 75%, which rises to 105% when considering total debt against GPU costs. Despite recently securing a $10 billion contract with Anthropic and developing an AI factory in Norway, potential investors are cautious because of Volta’s limited operating history. The company, valued at $2.4 billion after recent funding rounds, is part of a wave of AI infrastructure financings expected this fall.

Private Company Analysis

PCA has published earnings updates for CDK Global, Solera and Inetum for the lenders of the companies.

Ratings Actions

Moody’s affirmed BetaNXT Inc.’s corporate family rating at B3 and changed its outlook to stable from negative. This shift reflects an improved liquidity position, with $90 million in revolver availability and $30 million in cash, alongside expectations of positive free cash flow over the next year.

Capital Markets Activity
 

• Strategy Inc. raised $602.8 million through sales of its Class A common stock between Aug. 24 and Aug. 30. The company used $369.7 million of the proceeds to purchase 4,603 bitcoins at an average price of $80,318 per bitcoin. Additionally, Strategy allocated funds to repurchase its stretch preferred stock, pay dividends and enhance its dollar cash liquidity.

• Digi International announced that it has expanded and refinanced its senior secured revolving credit facility, increasing total borrowing capacity to $350 million. The expanded facility replaces Digi’s previous $250 million arrangement and extends its maturity date to Aug. 27, 2031. It also introduces improved pricing, featuring reduced SOFR margins tied to the company’s net leverage ratio.

• CDK reached an agreement on a liability management exercise in which its sponsor, Brookfield, will exchange approximately $675 million of its debt holding for lower-ranking paper with PIK interest, according to Bloomberg Law.
   

Anthropic Signs $35 Billion Cloud Deal Backed by Nvidia

Anthropic agreed to a $35 billion, six-year cloud computing deal with Lambda, a cloud provider backed by Nvidia, according to people familiar with the matter. Nvidia will supply chips for the project and also holds the lease on the Texas data center supporting the deal, an unusual structure that puts Nvidia in three roles at once as chip supplier, Lambda equity backer and lease anchor. The facility, being developed by Hut 8 in Nueces County, Texas, is expected to provide roughly 350 megawatts of capacity.

The deal is the latest in a run of massive compute commitments from Anthropic, which has also signed agreements worth $45 billion with Nscale, $50 billion with Fluidstack and $45 billion with SpaceX as it works to secure capacity for Claude and Claude Code amid a supply crunch that began earlier this year. Separately, Hut 8 is building additional Texas data centers for Anthropic that will run on Google’s tensor processing units instead of Nvidia hardware, with Google backing those projects through financial guarantees.

Dell’s AI Server Backlog Hits $95 Billion on Record Bookings

Dell reported second-quarter revenue of $47 billion on Sept. 1, up 58% year over year and well ahead of expectations. The Infrastructure Solutions Group, which houses data-center hardware, posted revenue of $31.8 billion, up 89%, including $16.4 billion from AI-optimized servers. Record AI server orders of $60.9 billion during the quarter pushed the backlog to $95 billion.

“We are seeing a growing trend of customers that require meaningful CPU compute capacity to support AI and agentic workflows,” said COO Jeff Clarke, adding that these workloads are creating incremental demand for traditional servers alongside AI infrastructure. Dell raised its full-year revenue guidance by $25 billion to $192 billion, up 69% year over year, with AI-optimized server revenue now projected to reach $74 billion for the year.

Broadcom Outlines Multiyear AI Roadmap & $35B Financing Deal

Broadcom’s AI semiconductor revenue hit $16.7 billion in its fiscal third quarter, increasing 221% year over year and 54% sequentially, pushing total consolidated revenue to a record $29.6 billion. Management provided fourth-quarter guidance for AI revenue of $21.7 billion (increasing 236% year over year) and laid out a multiyear roadmap targeting approximately $115 billion in AI revenue for fiscal 2027 and roughly $230 billion in fiscal 2028. Despite strong growth, its shares declined 4% on the morning of Sept. 3, likely due to a slightly softer-than-expected fourth-quarter revenue outlook and margin compression that overshadowed strong AI sales.

Its gross margin dipped to 75% (down 210 bps sequentially) as higher-memory AI semiconductor revenue accounted for a larger share of the revenue mix. Broadcom also disclosed that it had closed the first $35 billion tranche of its XPV Platform, a co-financing vehicle with Apollo and Blackstone, to fund Anthropic’s 1-GW Ironwood deployment. CEO Hock Tan articulated a longer-term strategic thesis: that Anthropic and OpenAI are on a path to becoming first-party hyperscalers running their own data centers and that Broadcom’s economic interest lies in helping them scale. He noted that each gigawatt of compute deployed could generate roughly $30 billion in annual revenue for these labs, making the financing investment highly strategic for Broadcom.

NVIDIA to Acquire Hugging Face

Nvidia agreed to acquire Hugging Face for $12.93 billion, giving the AI-chip giant control of one of the most important distribution and collaboration platforms in artificial intelligence. Hugging Face hosts more than 3 million AI models, roughly 500,000 data sets and more than 1 million applications, with a community of more than 18 million users and 200,000 companies. Nvidia CEO Jensen Huang said Hugging Face will continue operating as an open platform and developers will not be required to use Nvidia hardware.

The acquisition pushes Nvidia much further up the AI stack. The company already dominates the accelerators used to train and run large models, but Hugging Face gives it a direct position in the developer ecosystem where models are discovered, shared, fine-tuned, evaluated and deployed.