Key Takeaways
- AVGO shares climbed more than 5.7% following major AI partnership expansions with Google and Anthropic
- A multi-year TPU and networking supply agreement with Google extends through 2031
- Anthropic will secure access to 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
- Despite positive news, Seaport Global Securities moved AVGO to Neutral on valuation worries
Broadcom shares have experienced remarkable momentum recently. Following a dip under $300 in late March, the stock rebounded to approximately $375 by mid-April, powered by significant AI partnership developments and improving market conditions.
The most significant catalyst emerged on April 7, when Broadcom, Alphabet, and Anthropic collectively unveiled enhanced 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 iterations of Google’s Tensor Processing Units. Additionally, the companies executed a Supply Assurance Agreement guaranteeing Broadcom will furnish networking hardware for Google’s advanced AI infrastructure deployments extending to 2031.
Networking solutions represented approximately one-third of Broadcom’s AI-related revenue in the most recent quarter, underscoring the material significance of this component.
Google remains Broadcom’s primary and most 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 Substantial Future Revenue Potential
The Anthropic component of the announcement carries particularly compelling implications. Beginning in 2027, Anthropic will obtain roughly 3.5 gigawatts of TPU-driven AI computing infrastructure through Broadcom.
Bernstein analyst Stacy Rasgon estimates Broadcom generates approximately $20 billion in revenue per gigawatt. Applying this framework, the Anthropic arrangement represents considerable financial opportunity.
Previously, Broadcom indicated Anthropic’s requirements were “expected” to surpass 3 gigawatts. The updated announcement strengthens this language — Anthropic “will” access more than 3.5 gigawatts, with Broadcom implying this represents a portion of an even larger, extended commitment.
Broadcom included one 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 mere months.
Robust Quarterly Results Reinforce Growth Trajectory
These partnership developments built upon already-impressive financial performance. Broadcom delivered Q1 earnings per share of $2.05, surpassing the $2.03 analyst consensus, while revenue reached $19.31 billion versus expectations of $19.10 billion.
AI-specific revenue totaled $8.4 billion for the quarter, climbing 106% year-over-year, propelled by robust demand for customized AI accelerators and networking infrastructure.
A Pakistan-facilitated two-week ceasefire between Iran and the United States, announced April 7, also boosted overall market optimism. With a beta coefficient of 1.24, Broadcom characteristically exhibits amplified movement relative to broader market swings, and the improving risk appetite provided additional momentum.
Not all analysts share the enthusiasm. Seaport Global Securities lowered AVGO to Neutral, contending that AI-fueled growth has already been incorporated into consensus projections and that meaningful near-term upside appears constrained. The market generally dismissed this cautious perspective.
Broadcom’s annual revenue run rate has expanded from $9 billion to $30 billion in Anthropic, its newest significant customer, within just three months.
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