Broadcom is experiencing a significant surge in demand for its custom AI chips, driven by expanding partnerships with Google for TPUs and a massive ramp-up in deployments by Anthropic. This indicates a strong growth trajectory for Broadcom's AI semiconductor revenue, positioning it as a key player in the rapidly expanding AI infrastructure market.
Broadcom's CEO announced that Anthropic is on track to become their largest XPU customer by 2027, with plans to deploy 5 gigawatts of TPU v8i chips. This, coupled with an expanded long-term agreement with Google for 'multi-tens of billions of dollars' worth of TPUs annually, signals a massive increase in demand for Broadcom's custom AI chips. This is a significant positive catalyst for Broadcom, as it solidifies its position in the booming AI market and provides a clear revenue growth runway for several years. For Google and Anthropic, it ensures a critical supply of advanced AI hardware, which is essential for their AI development and deployment. Short-term, AVGO's stock may see upward pressure despite a slightly soft Q4 outlook, as the long-term AI narrative is very strong. Long-term, Broadcom is well-positioned to capitalize on the AI infrastructure build-out, but execution and competition remain key risks.