Broadcom Stock Rises On Google AI Chip Deal

Broadcom (AVGO) stock rose Tuesday after the company disclosed a long-term deal with Alphabet’s (GOOGL) Google to develop its custom artificial intelligence chips, known as tensor processing units.

The new agreement runs until 2031 and also covers networking and other components for AI server racks, Broadcom said in a regulatory filing late Monday.

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Separately, Broadcom, Google and Anthropic expanded their strategic collaboration. Under the agreement, beginning in 2027, Anthropic will access through Broadcom about 3.5 gigawatts of TPU-based AI compute capacity. The expanded AI compute capacity for Anthropic is dependent on Anthropic’s continued commercial success.

Anthropic announced in a blog post Monday that it has now surpassed a $30 billion annual revenue run rate, up from $9 billion at the end of 2025.

Wall Street analysts applauded Broadcom’s latest deals with Google and Anthropic.

Bernstein analyst Stacy Rasgon reiterated his outperform rating on Broadcom stock with a price target of 525. In early trades on the stock market today, Broadcom stock climbed more than 3% to 324.58.

“The new 5-year Google agreement (which includes compute for both internal use and external customers) seems incremental to us,” Rasgon said in a client note. However, the news is positive in that provides “a solid data point that both Broadcom and their largest customer believe they have substantial demand visibility far out into the future (or at least 5 years).”

Upbeat News For Broadcom Stock

William Blair analyst Sebastien Naji said the long-term agreement (LTA) with Google is good news for Broadcom. He rates Broadcom stock as outperform.

“While Broadcom’s engagement with next-generation TPUs comes as no surprise, the formal agreement provides greater assurance that Google’s partnership will extend over a multiyear and multi-generation time horizon,” Naji said in a report. “This LTA is likely to help push back against concerns that Google could move away from Broadcom in favor of a customer-owned-tooling (COT) approach.”

Broadcom competes with Taiwan-based MediaTek in developing TPUs for Google.

Broadcom Is On Two IBD Stock Lists

JPMorgan analyst Harlan Sur said Broadcom’s deals with Google and Anthropic are “a major proof point for the durability and expanding TAM (total addressable market) of Broadcom’s XPU ASIC (application-specific integrated circuit) franchise.”

Sur has an overweight rating on Broadcom stock with a price target of 500.

Broadcom’s deals with Google and Anthropic put “a floor under TPU demand for the foreseeable future,” Jefferies analyst Blayne Curtis said in a client note. “While not quantified, we do believe this LTA guarantees Broadcom a minimum amount of revenue (likely $200 billion range), implying strong sustained share.”

Curtis rates Broadcom stock as buy with a price target of 500.

Broadcom stock is on two IBD lists: Sector Leaders and Tech Leaders.

Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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