Key Takeaways
- AVGO shares rallied more than 5.7% following major AI partnership expansions with Google and Anthropic
- Broadcom secured a multi-year TPU development and networking supply agreement with Google extending to 2031
- Anthropic committed to utilizing 3.5 gigawatts of TPU-powered compute infrastructure via Broadcom beginning in 2027
- First-quarter AI-related revenue reached $8.4 billion, representing 106% growth versus the prior year
- Seaport Global Securities moved AVGO to Neutral rating on valuation concerns
Broadcom shares have experienced remarkable momentum recently. Following a dip beneath $300 in late March, AVGO rebounded to approximately $375 by mid-April, powered by significant AI collaboration announcements and improving market conditions.
The most impactful catalyst emerged April 7, when Broadcom, Alphabet, and Anthropic unveiled expanded 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 Tensor Processing Unit generations. Additionally, the companies executed a Supply Assurance Agreement guaranteeing Broadcom will furnish networking infrastructure for Google’s advanced AI rack systems through 2031.
Networking products represented approximately one-third of Broadcom’s AI-derived revenue in the previous quarter, making this portion of the agreement particularly significant.
Google remains Broadcom’s primary and most established custom silicon partner. This renewed collaboration encompasses several future TPU iterations, providing Broadcom with exceptional revenue predictability from its most critical client.
Anthropic Partnership Represents Substantial Future Revenue Opportunity
The Anthropic component of the announcement carries significant implications. Beginning 2027, Anthropic will utilize roughly 3.5 gigawatts of TPU-powered AI computing infrastructure through Broadcom.
Bernstein analyst Stacy Rasgon estimates Broadcom generates approximately $20 billion in revenue per gigawatt of capacity. By that calculation, the Anthropic arrangement represents considerable financial potential.
Previously, Broadcom indicated Anthropic’s requirements were “expected” to surpass 3 gigawatts. The updated announcement strengthens that language — Anthropic “will” utilize over 3.5 gigawatts, with Broadcom indicating this forms part of an extended, more substantial commitment.
Broadcom included one qualification: the expansion hinges on Anthropic’s “continued commercial success.” However, that threshold appears readily achievable. Anthropic’s annualized revenue trajectory accelerated from $9 billion at year-end 2025 to $30 billion by early April — tripling within just three months.
Robust Quarterly Results Underpin Partnership Momentum
These partnership developments built upon already-strong operational performance. Broadcom delivered Q1 earnings per share of $2.05, surpassing the $2.03 analyst consensus, while revenue of $19.31 billion exceeded the $19.10 billion projection.
AI-related revenue for the period totaled $8.4 billion, representing 106% year-over-year expansion, propelled by robust demand for customized AI accelerators and networking solutions.
A Pakistan-mediated two-week ceasefire between Iran and the United States, announced April 7, simultaneously boosted overall market optimism. With a beta coefficient of 1.24, Broadcom typically exhibits amplified volatility relative to broader indices, and the risk-favorable climate provided additional upward momentum.
Not all observers share the bullish perspective. Seaport Global Securities downgraded AVGO to Neutral, contending that AI-fueled growth is already incorporated into consensus projections and near-term appreciation potential remains constrained. Market participants largely dismissed the downgrade.
Broadcom’s newest major customer, Anthropic, has expanded its annual revenue run rate from $9 billion to $30 billion in merely three months.
