Quick Summary
- AVGO shares climbed 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 equipment supply agreement extending to 2031
- Anthropic will gain access to approximately 3.5 gigawatts of TPU-powered computing infrastructure via Broadcom beginning in 2027
- First-quarter AI-related revenue reached $8.4 billion, representing a 106% increase from the previous year
- Seaport Global Securities moved AVGO to Neutral rating, pointing to valuation challenges
Broadcom’s shares have experienced significant momentum recently. Following a dip beneath the $300 mark in late March, AVGO rebounded sharply to approximately $375 by April 10, propelled by multiple high-profile AI collaboration announcements and improving market conditions.
The most significant catalyst emerged on April 7, when Broadcom, Alphabet, and Anthropic collectively unveiled an extension of their AI infrastructure collaborations. Shares surged over 6% during that trading session.
Broadcom and Google established a long-range partnership for Broadcom to engineer and deliver upcoming iterations of Google’s Tensor Processing Units. Additionally, the companies executed a Supply Assurance Agreement designating Broadcom as the provider of networking infrastructure for Google’s advanced AI racks extending through 2031.
Networking solutions represented approximately one-third of Broadcom’s AI-generated revenue in the most recent quarter, underscoring the strategic importance of this agreement.
Google remains Broadcom’s premier and most enduring custom semiconductor client. This renewed collaboration encompasses several future TPU iterations, providing Broadcom with exceptional revenue predictability from its most critical customer.
Anthropic Partnership Projects Substantial Future Revenue Streams
The Anthropic component of the announcement represents a particularly compelling development. Beginning in 2027, Anthropic will utilize roughly 3.5 gigawatts of TPU-powered AI computing resources through Broadcom.
Bernstein analyst Stacy Rasgon has calculated that Broadcom typically generates approximately $20 billion in revenue per gigawatt. Based on this analysis, the Anthropic commitment represents considerable financial potential.
Previously, Broadcom had indicated Anthropic’s requirements were “expected” to surpass 3 gigawatts. The updated announcement strengthens this language—Anthropic “will” utilize over 3.5 gigawatts, with Broadcom indicating this forms part of an extended, broader commitment.
Broadcom included a qualification: the expansion remains contingent upon Anthropic’s “continued commercial success.” However, this threshold appears readily achievable currently. Anthropic’s annualized revenue trajectory increased from $9 billion at year-end 2025 to $30 billion by early April—a threefold expansion within merely three months.
Robust Financial Results Underpin Growth Trajectory
These partnership developments built upon already-strong operational performance. Broadcom delivered Q1 earnings per share of $2.05, exceeding the consensus projection of $2.03, while revenue reached $19.31 billion versus the anticipated $19.10 billion.
AI-generated revenue for the quarter totaled $8.4 billion, marking a 106% year-over-year increase, fueled by heightened demand for customized AI accelerators and networking solutions.
A Pakistan-facilitated two-week ceasefire between Iran and the United States, announced April 7, additionally boosted overall market optimism. With a beta coefficient of 1.24, Broadcom typically exhibits amplified movements relative to broader market trends, and the positive risk environment provided additional momentum.
Not all analysts share the optimistic outlook. Seaport Global Securities reduced AVGO to a Neutral rating, contending that AI-driven growth is already incorporated into consensus projections and that immediate upside potential appears constrained. Market participants largely dismissed this assessment.
Broadcom’s annualized revenue visibility from Anthropic, its most recent major client, has expanded from $9 billion to $30 billion within just three months.
