Broadcom (NASDAQ: AVGO) shares jumped nearly 3%–3.6% on Tuesday, trading around $325, after the chipmaker unveiled a series of major artificial intelligence deals with Google and Anthropic that could shape its growth trajectory well into the next decade.
The rally comes as investors digest what may be one of the most significant AI infrastructure commitments announced this year. Broadcom confirmed it will continue developing and supplying Google’s custom tensor processing units (TPUs) through 2031, while also expanding a separate agreement that allows Anthropic to access roughly 3.5 gigawatts of next-generation compute capacity starting in 2027.
Combined, the total new capacity tied to these agreements could approach 5 gigawatts, according to people familiar with the matter. At an estimated $35 billion to $50 billion per gigawatt, the implied infrastructure investment could run into the hundreds of billions of dollars, underlining the sheer scale of the ongoing AI buildout.
AI demand surges as Anthropic growth accelerates
Driving much of this demand is Anthropic’s explosive growth. The company said its annualised revenue surged to $30 billion by the end of March, up sharply from about $9 billion at the end of 2025 — more than a threefold increase in just a few months.
Enterprise adoption is also accelerating fast. The number of customers spending over $1 million annually has jumped to more than 1,000, doubling since February. That kind of rapid expansion is forcing AI companies to secure long-term compute capacity early, and Broadcom is emerging as a key beneficiary.
These deals build on a growing list of infrastructure commitments. Anthropic has already signed agreements worth $50 billion with Fluidstack and another $30 billion in capacity deals involving Microsoft and Nvidia, showing how competitive the AI compute race has become.
Broadcom gains visibility as Google partnership deepens
For investors, one of the biggest takeaways is improved visibility. Broadcom’s expanded partnership with Google helps ease earlier concerns that the tech giant might shift more chip development in-house or reduce reliance on external partners.
Instead, the new agreement reinforces Broadcom’s role at the center of AI infrastructure, not just as a supplier, but as a long-term strategic partner. Analysts now expect Broadcom’s share of the AI accelerator market to rise from below 10% in 2025 to around 15%+ by 2026–2027.
The company also secured a supply assurance deal that ensures Google will continue using Broadcom’s networking components in next-generation AI server systems, further strengthening its position across the AI value chain.
Stock rally meets valuation debate
Despite the strong momentum, valuation remains a key question. Broadcom stock has delivered a staggering 105.6% return over the past year and more than 421% gains over three years, with over 7x returns in five years. However, the stock is still down about 9.5% year-to-date, reflecting recent volatility across AI names.
On a valuation basis, the picture is mixed. A discounted cash flow (DCF) model estimates Broadcom’s intrinsic value at around $339.47 per share, suggesting the stock is trading at roughly a 7% discount — close to fair value rather than deeply undervalued.
Meanwhile, the company trades at a P/E ratio of 59.6x, above the semiconductor industry average of 36.3x, indicating a premium tied to its AI growth exposure. Analysts estimate a “fair” P/E closer to 55.7x, suggesting the stock may be slightly stretched on earnings multiples.
Too late to buy Broadcom?
The answer depends on the narrative investors choose to believe. Bullish scenarios suggest fair value could reach as high as $472, implying upside of more than 30%, driven by strong AI demand, expanding margins, and recurring software revenue from VMware integration.
More cautious estimates place fair value closer to $258, highlighting risks such as semiconductor cyclicality, customer concentration, and execution challenges.
For now, the market appears to be leaning toward the growth story. With multi-year contracts, rising AI demand, and stronger ties to both Google and Anthropic, Broadcom is increasingly positioned as a core player in the next phase of the AI infrastructure boom.
The latest 3% jump may be just another step in a much larger trend.
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