TLDR
- Broadcom stock jumped 11.1% Monday, delivering its strongest performance since early April
- Google’s surging AI workloads fuel demand for Broadcom’s custom tensor processing units
- Wall Street raised price targets to $475-$480 range, seeing 39-41% additional upside ahead
- Token processing at Google jumped from 480 trillion to 1,300 trillion monthly between April and October
- VMware division generates $6.8 billion quarterly, providing balance to cyclical chip sales
Broadcom shares surged 11.1% Monday. The gain marked the chip designer’s best session since April 9.
The rally pushed Broadcom to the top of the S&P 500 leaderboard. Investors returned to AI infrastructure stocks after a period of weakness.
Alphabet shares climbed over 5% the same day. The connection between these moves runs deeper than market sentiment.
Broadcom designs and builds Google’s custom AI processors. These chips handle the computing workload behind Google’s expanding AI services.
The partnership stretches back to 2016. Google’s seventh-generation tensor processing units now compete directly with Nvidia’s hardware.
Price Targets Jump on Processing Growth
Melius Research increased its Broadcom target to $475 from $415. The firm maintained its buy rating.
“The TPU is rapidly becoming a larger part of Alphabet’s growth strategy,” analyst Ben Reitzes wrote. He sees early investment decisions now generating returns for both companies.
Jefferies analyst Blayne Curtis raised his target to $480. That implies another 41% climb from recent prices.
Curtis highlighted Google’s exploding computational needs. Monthly token processing reached 1,300 trillion in October.
That volume represents nearly triple the 480 trillion tokens processed in April 2025. The growth reflects expanding use of AI across Google’s product lineup.
“This should grow even more as compute is needed for multimodal models,” Curtis explained in his note.
Wedbush’s Dan Ives owns both Broadcom and Alphabet in his AI-focused ETF. He called them “the new AI plays the market is rediscovering.”
The stock now trades near $380 after gaining 60% this year. Volume picked up during Monday’s session as institutional buyers returned.
Multiple Customer Base Reduces Risk
Broadcom supplies custom chips to four confirmed hyperscale customers. The roster includes both Google and Meta.
Building these specialized processors requires multi-year engineering partnerships. The technical complexity creates switching barriers once relationships form.
Networking products add a second hardware revenue stream. Broadcom’s Tomahawk Ultra switches handle connections between thousands of accelerators.
Cloud providers building massive AI clusters need this infrastructure. Some facilities now house over 100,000 individual processors.
Software Business Adds Predictability
VMware brought in $6.8 billion during Q3. Revenue climbed 17% compared to last year’s quarter.
Broadcom continues converting customers from perpetual licenses to subscriptions. The shift creates recurring monthly payments instead of one-time fees.
This model improves cash flow consistency. Management can plan investments with greater confidence about future income.
The software division balances volatility in chip demand. Hardware sales fluctuate with economic cycles while subscriptions remain steady.
Google recently launched its Gemini 3 AI model to commercial customers. The company also announced “Ironwood,” its next-generation tensor processing unit.
Additional releases include Nano Banana Pro for image generation and Google Antigravity for AI-powered automation. These products drive the token processing growth that benefits Broadcom’s chip business.
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