GoKawiilBroadcom shares rose more than 6% on Tuesday, their second-best day of the year, after the chip designer announced it would produce future versions of artificial intelligence chips for Google, and signed an expanded deal with Anthropic.
The pact with Anthropic will give the AI startup access to about 3.5 gigawatts worth of computing capacity, drawing on Google's homegrown tensor processing units, or TPUs.
Broadcom's stock has endured a tough start to 2025, falling almost 10% prior to Tuesday's rally, as concerns about the AI buildout coupled with soaring energy costs caused by the war in Iran pushed investors out of many leading tech names.
Analysts at Mizuho maintained their buy recommendation on Broadcom and wrote in a report on Tuesday that the deals with Google and Anthropic are a boon to the company's AI business, and that "the tighter TPU partnership strengthens AVGO's position."
Last month, Broadcom reported blowout earnings, and CEO Hock Tan touted strong future demand for the company's chips. He told analysts that he anticipates AI chip revenue in 2027 that's "significantly in excess of $100 billion."
Matt Britzman, an analyst at Hargreaves Lansdown, said the latest deals "should help ease some of the recent nervousness around TPU competition" and indicate that Broadcom's "largest customer sees meaningful demand visibility well into the future."
"We already saw upside to medium-term revenue and profit expectations off the back of recent results; these new deals help underpin that idea if deployment ramps as planned," Britzman said.
Citi analysts maintained their buy rating for the stock, seeing Broadcom surpassing its $100 billion revenue target and reaching more than $130 billion off the back of the Google deal.