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Shares in Broadcom rose 3.7% in premarket trading on Tuesday after the chip designer announced it would produce future versions of artificial intelligence chips for Google, and signed an expanded deal with Anthropic.
The latter deal will give the AI startup access to about 3.5 gigawatts worth of computing capacity, drawing on Google’s AI processors and providing some relief for the share price.
Broadcom stock has endured a tough start to 2025, falling almost 10% year-to-date as investors have become increasingly jittery around the bull case for technology stocks. It has also been caught up in the maelstrom of the wider market caused by the U.S.-Israeli attack on Iran that began on February 28.
The drift downwards comes despite a blowout earnings report in March, during which CEO Hock Tan touted strong future demand for the company’s chips.
He told analysts last month that he anticipates AI chip revenue in 2027 that’s “significantly in excess of $100 billion” as demand mounts for designing custom silicon.
Analysts remain bullish following Monday’s announcements.
“The deal includes revenue commitments across that timeline, which should help ease some of the recent nervousness around TPU competition and give a clearer signal that its largest customer sees meaningful demand visibility well into the future,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“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.”
Citi analysts maintained their ‘Buy’ rating for the stock, backing Broadcom to surpass its $100 billion revenue target to more than $130 billion off the back of the Google deal.
— CNBC’s Jordan Novet also contributed to this report.
