Broadcom's stock (AVGO) surged over 5.7% following major announcements expanding its artificial intelligence partnerships with tech giants Google and Anthropic. The company formalized a long-term agreement to develop and supply future generations of Google's Tensor Processing Units (TPUs) and signed a Supply Assurance Agreement to provide networking components for Google's next-generation AI racks through 2031. This deal is significant as networking equipment constituted one-third of Broadcom's AI revenue last quarter.
In a separate but related development, AI startup Anthropic confirmed it will access approximately 3.5 gigawatts of TPU-based AI compute capacity through Broadcom starting in 2027. This commitment, upgraded from previous "expected" language to a firm "will," represents a massive future revenue stream. Analyst estimates suggest Broadcom generates around $20 billion in revenue per gigawatt, placing the Anthropic deal in the tens of billions. The expansion is contingent on Anthropic's "continued commercial success," a bar the company appears to be clearing easily, having tripled its annual revenue run rate from $9 billion at the end of 2025 to $30 billion by early April 2026.
The partnership news built upon strong Q1 2026 financial results. Broadcom reported earnings per share (EPS) of $2.05, beating the $2.03 consensus estimate, on revenue of $19.31 billion against a $19.10 billion forecast. AI-specific revenue for the quarter hit $8.4 billion, marking a staggering 106% year-over-year increase, driven by demand for custom AI accelerators and networking products.
Despite the bullish news, some analysts expressed caution. Seaport Global Securities downgraded AVGO to Neutral, citing valuation concerns and the belief that AI-driven gains are already priced into consensus estimates, limiting near-term upside. Furthermore, during the stock rally, three Broadcom insiders—President Charlie Kawwas, ISG President S. Ram Velaga, and Director Justine Lien—sold a combined $14.8 million worth of stock. The broader analyst consensus, however, remains positive with a "Moderate Buy" rating and an average price target of $435.30, with firms like Barclays, Rosenblatt, and KeyCorp setting targets as high as $500.
