Broadcom’s Stock Rises After AI Processor Deals
Broadcom Inc. (AVGO) experienced a surge in its stock value during early trading on Tuesday, following the announcement of two significant agreements related to custom artificial intelligence (AI) processors made on Monday. This included a collaboration with Google (GOOG, GOOGL) and another joint deal involving Google and Anthropic (ANTH.PVT). As a result, Broadcom’s shares rose by over 3%, even as broader market conditions declined amidst heightened geopolitical tensions involving President Trump and Iran.
According to Broadcom’s filing with the SEC (8-K), the company secured a long-term arrangement to develop and supply tailored Tensor Processing Units (TPUs) for Google. Additionally, there is a supply assurance agreement, ensuring that Google will utilise Broadcom’s networking components in its upcoming AI server racks until 2031. However, the specific financial terms of these agreements have not been disclosed publicly.
Moreover, Broadcom has extended its existing partnership with both Google and Anthropic, allowing Anthropic to access a substantial 3.5 gigawatts of Google’s advanced TPUs. This expansion is contingent on Anthropic sustaining its commercial success, which currently seems well-founded. Anthropic recently announced in a press release that its revenue run-rate has exceeded $30 billion, a significant increase from $9 billion at the close of 2025, driven by strong demand for its Claude platform.
Furthermore, the firm has seen a notable rise in the number of businesses spending over $1 million annually with Anthropic, jumping from 500 in February to 1,000 as of early April.
BofA Global Research analyst Vivek Arya expressed in a communication to investors that these developments illuminate Broadcom’s strategic direction and alleviate concerns over potential stock overhang stemming from fears that Google might turn to in-house manufacturing or collaborate with other manufacturers like MediaTek. Customer-owned tooling (CoT) allows businesses more control over the chip manufacturing process; however, it introduces significant risks compared to fully outsourcing production to companies such as Broadcom.
Arya noted, "We believe Broadcom is well-positioned to gain accelerator share in CY26 and CY27 (from less than 10% in CY25 towards approximately 15%+), now bolstered by further expansions with Google and Anthropic, in addition to prior agreements with OpenAI that range from 1 to 10 gigawatts."
In a similar vein, analyst Stacy Rasgon from Bernstein commented that the deal with Google represents an incremental benefit for Broadcom. He stated that it may alleviate concerns tied to customer-owned tooling while also indicating strong demand visibility shared by both Broadcom and its largest customer for years to come.
Over the past year, Broadcom’s stock has significantly profited from the AI sector boom, rising 110%. Nonetheless, similar to many stocks associated with AI, it has faced a downturn in 2023, losing more than 6% since the beginning of the year.
In summary, Broadcom’s recent agreements not only affirm its strategic foothold in the rapidly evolving AI market but also signify robust partnerships that enhance its operational outlook. As the company continues to navigate through these developments, investor confidence appears to be growing, demonstrating the potential for further growth in the sector.
