×
Broadcom scores $10B AI chip deal, shares surge 11% premarket
Written by
Published on
Join our daily newsletter for breaking news, product launches and deals, research breakdowns, and other industry-leading AI coverage
Join Now

Broadcom shares surged 11% in premarket trading after the chipmaker announced a massive $10 billion AI chip order from a new customer, marking one of the largest deals in the company’s history. The blockbuster agreement reinforces Broadcom’s position as a leading custom chip provider as Big Tech companies seek alternatives to Nvidia’s expensive and supply-constrained processors, while potentially adding over $160 billion to the company’s $1.44 trillion market valuation.

What you should know: The deal represents a significant milestone in Broadcom’s AI strategy and could reshape competitive dynamics in the custom chip market.

  • If premarket gains hold, Broadcom would cross new valuation territory, building on shares that are already up 32% this year after more than doubling in 2024.
  • The company expects “significantly improved” AI revenue growth in fiscal 2026, with analysts projecting AI sales could exceed $40 billion, up from previous expectations of $30 billion.

Who the customer likely is: Multiple analysts point to OpenAI as the unnamed customer behind this massive chip order.

  • J.P.Morgan, Bernstein, and Morgan Stanley analysts cited the timing and scale of the deal as evidence pointing toward OpenAI.
  • Reuters previously reported that OpenAI was collaborating with Broadcom to develop its first in-house chip, adding credibility to this speculation.
  • Broadcom’s existing custom chip customers are believed to include Alphabet’s Google and Meta Platforms, though the company doesn’t publicly identify its cloud clients.

The big picture: This deal solidifies Broadcom’s role in helping major tech companies reduce their dependence on Nvidia’s AI processors.

  • “While we agree Broadcom is taking more share, we believe the AI pie could just be getting bigger,” BofA Securities analysts said.
  • The agreement could help reinforce investor confidence in the AI rally, which has shown signs of weakening throughout the year.

Leadership continuity: CEO Hock Tan announced he will remain at the helm for at least five more years, providing stability during this critical growth phase.

  • Tan, who was 73 as of Broadcom’s March proxy filing, has led the chipmaker for nearly two decades and positioned it at the center of the AI boom.
  • His continued leadership signals long-term commitment to executing Broadcom’s AI strategy and maintaining relationships with major tech customers.

Market context: Broadcom’s surge comes as the semiconductor industry navigates supply constraints and increasing demand for AI-specific chips.

  • The company has significantly outperformed both the S&P 500 and semiconductor benchmarks this year.
  • With Bernstein analysts projecting AI sales could reach “well over $40 billion” in fiscal 2026, Broadcom is positioning itself as a critical player in the custom silicon market that’s emerging as an alternative to Nvidia’s dominance.
Broadcom shares rally as $10 billion chip deal shows AI strategy paying off

Recent News

Cambridge researchers use AI to map hedgehog habitats from satellite data

The bramble detector uses simple machine learning, not complex models like ChatGPT.

Google rolls out 4 audio enhancements for Pixel Buds Pro 2 earbuds

The update transforms solid performers into context-aware devices that adjust to your environment.

Insta360 launches Wave AI speakerphone with levitating design for elevated productivity

Transforming meeting chatter into searchable insights with eight noise-canceling microphones.