Broadcom Inc. opened Monday with a market capitalization of approximately $2.11 trillion, vaulting past Tesla, Meta Platforms, and Walmart as investors increasingly bet on its custom artificial intelligence chip business. Shares traded near $433 in early action, extending a rally that has seen the stock climb 45% over the past six weeks amid a broader semiconductor surge.
AI Revenue Surge Drives Growth
The company reported first-quarter revenue of $19.31 billion, a 29% year-over-year increase, with AI-related revenue soaring 106% to $8.4 billion. Custom AI accelerators and networking solutions were the primary drivers. Looking ahead, Broadcom guided for second-quarter revenue of roughly $22 billion, with $10.7 billion expected from AI semiconductors.
CEO Hock Tan has outlined a "line of sight" to over $100 billion in AI chip revenues by 2027, a projection that analysts say signals significant demand. Goldman Sachs analyst James Schneider reiterated a buy rating with a $480 price target, noting that agentic AI—technology capable of planning and responding—remains in early enterprise adoption stages, with fewer than a quarter of companies deploying it at scale.
Strategic Partnerships and Long-Term Deals
In a pivotal move, Broadcom disclosed a long-term agreement with Google to supply and develop custom Tensor Processing Units through 2031. The deal also includes providing Anthropic with access to approximately 3.5 gigawatts of next-generation TPU-powered AI compute starting in 2027, contingent on Anthropic's commercial performance. Anthropic described the agreement as its "most significant compute commitment to date," noting its annualized revenue run rate has surged to over $30 billion from roughly $9 billion at the end of 2025.
Meta's partnership with Broadcom has been extended through 2029, covering more than 1 gigawatt initially, with plans to scale to several gigawatts as Meta advances its MTIA custom AI chips. Broadcom is responsible for providing chips, packaging, and Ethernet networking technology.
VMware Integration and Competitive Landscape
Broadcom is weaving its VMware software business into the AI narrative. On May 5, it launched VMware Cloud Foundation 9.1, targeting production AI workloads, with internal projections indicating up to a 40% reduction in server costs and 39% lower storage total cost of ownership for select AI workloads.
While Nvidia remains the dominant force in AI accelerators and AMD has secured significant contracts, Broadcom's custom ASIC processors are gaining traction. Cloud providers are increasingly considering these tailored chips as alternatives to Nvidia gear for specialized data center workloads.
Risks and Outlook
Goldman Sachs flagged potential downside risks, including a pullback in AI infrastructure spending, loss of market share in custom compute, softer non-AI demand, and intensifying competition in VMware's market. Additionally, Broadcom's exposure to Anthropic's TPU spending hinges on the startup's ongoing commercial performance.
Broadcom is scheduled to report fiscal second-quarter earnings on June 3 after the market close. Wall Street will be watching closely to see if AI revenue momentum remains on track for the 2027 target and whether order growth justifies the company's $2 trillion-plus valuation.
