Broadcom announced on Monday that it had signed long-term agreements with Google and Anthropic to develop custom artificial intelligence chips. The deal with Google spans through 2031, focusing on future generations of AI chips and other components for next-generation AI racks according to Reuters. Simultaneously, Broadcom agreed to provide Anthropic access to about 3.5 gigawatts of computing capacity starting in 2027.
Key Takeaways
Broadcom announced long-term agreements to develop custom AI chips for Google through 2031 and provide Anthropic with 3.5 gigawatts of computing capacity starting in 2027. Shares rose over 3% following the announcement, reflecting growing demand for advanced AI infrastructure.
The financial terms of these deals were not disclosed. However, shares of Broadcom rose approximately 3% in extended trading following the announcement according to Reuters. This surge underscores the growing demand for infrastructure capable of running advanced generative AI models as businesses seek alternatives to Nvidia's graphics processors.
The partnership with Anthropic builds on the company's commitment to invest $50 billion in strengthening U.S. computing infrastructure according to Reuters. Demand for its AI model, Claude, has accelerated significantly in 2026, with annualized revenue surpassing $30 billion, up from about $9 billion at the end of 2025 as reported by CNBC. Anthropic now counts over 1,000 business clients spending more than $1 million annually.
Broadcom CEO Hock Tan mentioned on an earnings call last month that demand for computing capacity is expected to surge in excess of 3 gigawatts in 2027 according to CNBC. Analysts at Mizuho estimated Broadcom would generate $21 billion in AI revenue from Anthropic in 2026 and $42 billion in 2027. Additionally, Broadcom is collaborating with OpenAI on custom silicon for AI.
Shares of Broadcom rose by 3.7% in premarket trading on Tuesday following the announcement according to CNBC. Despite a tough start to 2025, falling almost 10% year-to-date due to investor jitters around technology stocks and market volatility caused by geopolitical tensions, Broadcom's stock has shown signs of recovery. CEO Hock Tan anticipates AI chip revenue in 2027 that is significantly in excess of $100 billion as demand for custom silicon continues to grow.
Analysts remain bullish following Monday's announcements. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that the deal includes revenue commitments across the timeline, which should ease recent nervousness around competition and provide a clearer signal of future demand visibility according to CNBC. Citi analysts maintained their 'Buy' rating for Broadcom stock, expecting it to surpass its $100 billion revenue target to more than $130 billion off the back of the Google deal.
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