Key Highlights
- AVGO shares climbed more than 5.7% following strengthened AI collaborations with Google and Anthropic
- A multi-year TPU and networking supply agreement with Google extends through 2031
- Anthropic secured access to 3.5 gigawatts of TPU-based computing infrastructure via Broadcom beginning in 2027
- First-quarter AI revenue reached $8.4 billion, representing 106% growth compared to the prior year
- Analysts at Seaport Global Securities adjusted their rating to Neutral based on current valuation levels
Broadcom’s shares have experienced significant momentum recently. Following a dip below the $300 mark in late March, AVGO recovered to approximately $375 by April 10, driven by several high-profile AI partnership announcements alongside improving overall market conditions.
The most significant development emerged on April 7, when Broadcom, Alphabet, and Anthropic collectively revealed expanded AI infrastructure collaborations. Shares gained over 6% during that trading session.
Broadcom and Google established a long-term arrangement for Broadcom to engineer and deliver upcoming generations of Google’s Tensor Processing Units. Additionally, a Supply Assurance Agreement guarantees Broadcom will furnish networking hardware for Google’s next-generation AI rack systems through 2031.
Networking products represented one-third of Broadcom’s AI-related revenue in the previous quarter, making this portion of the agreement particularly meaningful.
Google remains Broadcom’s largest and most enduring custom chip partner. This extended agreement covers several upcoming TPU generations, providing Broadcom with exceptional revenue predictability from its most critical client.
Anthropic Agreement Projects Substantial Future Revenue Stream
The Anthropic component of the announcement holds considerable significance. Beginning in 2027, Anthropic gains access to roughly 3.5 gigawatts of TPU-powered AI computing infrastructure through Broadcom.
Bernstein analyst Stacy Rasgon has calculated that Broadcom typically generates approximately $20 billion in revenue per gigawatt. Based on this formula, the Anthropic commitment represents substantial potential value.
Earlier communications from Broadcom indicated that Anthropic’s requirements were “expected” to surpass 3 gigawatts. The updated announcement strengthens that projection — Anthropic “will” utilize over 3.5 gigawatts, with Broadcom indicating this represents a portion of a more extensive, extended commitment.
Broadcom included a qualification: the expansion hinges on Anthropic’s “continued commercial success.” That condition appears readily achievable given current trajectory. Anthropic’s annual revenue run rate accelerated from $9 billion at the close of 2025 to $30 billion by early April — a threefold increase within just three months.
Quarterly Results Demonstrate Robust Performance
These partnership announcements arrived alongside already-strong financial results. Broadcom delivered Q1 EPS of $2.05, surpassing the $2.03 analyst consensus, while revenue totaled $19.31 billion versus expectations of $19.10 billion.
AI-related revenue for the quarter measured $8.4 billion, reflecting 106% year-over-year expansion, powered by heightened demand for custom AI accelerators and networking solutions.
A Pakistan-facilitated two-week ceasefire between Iran and the US, declared April 7, also elevated broader market optimism. Given a beta of 1.24, Broadcom typically experiences amplified movements relative to overall market trends, and the positive risk sentiment provided additional momentum.
Some analysts maintain caution. Seaport Global Securities moved AVGO to Neutral, contending that AI-driven growth already factors into current consensus projections and that near-term appreciation potential appears constrained. Market reaction to this assessment remained muted.
Broadcom’s newest major customer, Anthropic, has seen its annual revenue run rate expand from $9 billion to $30 billion within a three-month period.
