Broadcom's Custom Chip Offensive Gathers Pace as $6 Billion Orders and OpenAI Collaboration Rewrite the AI Narrative

Broadcom shares rise 3.4% after $6B binding orders and OpenAI's Jalapeño chip project. AI revenue surged 143%, backlog exceeds $150B by 2027, and stock holds above key support.

Broadcom is emerging from a sharp sell-off with fresh ammunition: a pair of new customers just placed binding orders worth $6 billion, and the company's role as the silent engine behind OpenAI's in-house chip ambitions is drawing investor attention back to the stock. After shedding roughly 21% of its value in 30 days, the shares rose 3.41% on Friday to €325.95, pushing the weekly return into positive territory at 1.53%.

The recent volatility has been painful, but the longer-term picture remains intact. Broadcom is up nearly 10% year-to-date and 39% over the past twelve months. From a technical perspective, the stock is trading above its 200-day moving average of €311.34, which has provided reliable support. However, it still sits below the 50-day line at €352.00 — and a full recovery to the June 3 record of €429.60 would require a further 24% climb.

A Nine-Month Chip Sprint

The catalyst for the latest leg of the rally was OpenAI's June 24 unveiling of "Jalapeño," an inference accelerator designed for large language models. Broadcom provided chip implementation, high-performance Tomahawk-series networking, and advanced packaging — and the entire tape-out cycle took just nine months. Test samples are already running GPT-5.3 workloads in the lab, with a broad commercial rollout alongside Microsoft slated for late 2026.

This tie-up is emblematic of a broader shift in the semiconductor landscape. Custom accelerators now account for 60% of AI chip revenue, and Broadcom is deeply embedded in the design and supply chain. In the second fiscal quarter, the company's AI-related revenue surged 143% year-over-year to $10.8 billion — nearly half of total corporate sales. Management has guided for a further jump to $16 billion in the current quarter, which would more than triple the year-ago figure. A free cash flow margin of 46% provides ample financial cushion.

Hyperscaler Capex and the Tomahawk Advantage

The macro backdrop is equally supportive. Capital expenditure among the largest tech firms is projected to hit roughly $650 billion in 2026, fuelling demand for custom silicon and high-speed networking. Broadcom's Tomahawk-6 switch chip, with a 102.4-terabit-per-second capacity, entered volume production on March 12 and is believed to be roughly two quarters ahead of Nvidia's competing Spectrum-X1600 series, which is not expected until the second half of 2026. That timing advantage matters as hyperscalers migrate to 1.6T Ethernet to handle growing AI clusters.

Beyond OpenAI, Broadcom continues to deepen its relationship with Meta and expand its footprint at Anthropic, which is reportedly in talks with Samsung for next-generation chips. The company also recently secured a major contract to supply computing capacity to Anthropic. JPMorgan analyst Harlan Sur, reiterating an Overweight rating and a $580 price target on June 17, noted that Broadcom's AI backlog — previously estimated at $120 billion — is now projected to exceed $150 billion by 2027, driven by multi-year deals with Google, Meta, and Anthropic. Jefferies maintained a Buy rating with a $550 target on June 30, calling the recent dip an attractive entry point for long-term investors.

TPU-v9 and the VMware Tail

Concerns about the Google TPU-v9 program have been explicitly addressed by JPMorgan, which stated that the 2-nanometer project remains "firmly on schedule" for production start in 2028. Meanwhile, the VMware integration — completed with the November 2023 acquisition and the subsequent switch to a subscription-only licensing model — continues to generate customer discussion but has been absorbed into the financials.

Investors now have two key milestones on the horizon: the broad deployment of the Jalapeño chip with Microsoft in late 2026, and the ramp of Google's next-generation TPU in 2028. Both projects underpin Broadcom's claim to a dominant slice of the custom AI chip market — and the $6 billion in fresh orders suggests that claim is being backed by real commitments.