Key Takeaways
- AVGO shares rallied more than 5.7% following announcements of expanded AI collaborations with Google and Anthropic
- Broadcom and Google secured a multi-year TPU development and networking component agreement extending to 2031
- Anthropic committed to utilizing 3.5 gigawatts of TPU-powered computing infrastructure via Broadcom beginning in 2027
- First-quarter AI revenue reached $8.4 billion, representing a 106% increase from the prior year
- Seaport Global Securities moved AVGO to Neutral on valuation considerations
Broadcom shares have demonstrated remarkable momentum recently. Following a dip beneath the $300 threshold in late March, AVGO recovered to approximately $375 by April 10, propelled by significant AI collaboration announcements and an improving market environment.
The most significant development emerged on April 7, when Broadcom, Alphabet, and Anthropic collectively unveiled an expansion of their AI infrastructure collaborations. Shares surged over 6% in a single trading session.
Broadcom and Google established a comprehensive long-term partnership for Broadcom to engineer and deliver upcoming generations of Google’s Tensor Processing Units. Additionally, the companies executed a Supply Assurance Agreement guaranteeing Broadcom will furnish networking infrastructure for Google’s advanced AI rack systems through 2031.
Networking hardware represented approximately one-third of Broadcom’s AI-related revenue in the most recent quarter, underscoring the material significance of this agreement.
Google remains Broadcom’s most substantial and enduring custom silicon partner. This renewed collaboration encompasses several future TPU iterations, providing Broadcom with exceptional revenue predictability from its most critical client.
Anthropic Agreement Unlocks Significant Revenue Potential
The Anthropic component of the announcement represents a particularly compelling opportunity. Beginning in 2027, Anthropic will leverage approximately 3.5 gigawatts of TPU-powered AI computing infrastructure through Broadcom.
Bernstein analyst Stacy Rasgon estimates Broadcom generates roughly $20 billion in revenue per gigawatt. Using this framework, the Anthropic commitment represents substantial revenue potential.
Previously, Broadcom indicated Anthropic’s requirements were “expected” to surpass 3 gigawatts. The updated announcement uses more definitive language — Anthropic “will” utilize over 3.5 gigawatts, with Broadcom indicating this forms part of a broader, extended commitment.
Broadcom included a qualification: the expansion hinges on Anthropic’s “continued commercial success.” However, this threshold appears readily achievable. Anthropic’s annualized revenue trajectory accelerated from $9 billion at 2025’s conclusion to $30 billion by early April — tripling within just three months.
Impressive Quarterly Results Reinforce Growth Narrative
These partnership announcements built upon already-robust financial performance. Broadcom delivered Q1 EPS of $2.05, exceeding the $2.03 analyst consensus, with revenue of $19.31 billion surpassing the $19.10 billion projection.
AI-related revenue for the quarter totaled $8.4 billion, climbing 106% year-over-year, fueled by strong demand for customized AI accelerators and networking solutions.
A Pakistan-mediated two-week ceasefire between Iran and the United States, announced April 7, also enhanced overall market sentiment. With a beta coefficient of 1.24, Broadcom typically exhibits amplified movements relative to broader market trends, and the positive risk appetite provided additional momentum.
Not all analysts share the optimism. Seaport Global Securities downgraded AVGO to Neutral, contending that AI-driven growth is already reflected in consensus projections and that near-term appreciation potential is constrained. The market generally dismissed this cautious perspective.
Broadcom’s annual revenue run rate has increased from $9 billion to $30 billion in Anthropic, its newest major customer, in just three months.
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