Broadcom's AI Revenue Engine Powers Through Competitive Headwinds

Broadcom's AI revenue surges 65% to $20.2B, backed by long-term deals with Google, Meta, and OpenAI. Stock up 26% as analysts raise targets.

Broadcom Inc. shares, trading at €340.95, are riding a wave of unprecedented demand for its custom artificial intelligence chips, even as key customer Alphabet explores alternative suppliers. The stock's 26% surge over the past month reflects investor confidence in a business model anchored by long-term contracts stretching to 2031.

The company's recent financial performance underscores this momentum. For the 2025 fiscal year, Broadcom posted record revenue of $63.9 billion, with AI semiconductor sales jumping 65% to $20.2 billion. The current quarter is projected to be even stronger, with total revenue expected to hit $22 billion—a 47% year-over-year increase. AI-specific revenue is forecast to reach $10.7 billion this quarter, representing a staggering 140% rise.

This growth is structurally supported by a series of monumental partnerships. A cornerstone agreement with Alphabet's Google secures Broadcom's position as the primary Tensor Processing Unit (TPU) design and networking partner through 2031. Analysts at Mizuho estimate Broadcom's relationships with Google and AI startup Anthropic alone will generate approximately $21 billion in revenue this year.

The competitive landscape, however, is evolving. Reports from April 19 indicate Alphabet is in active talks with Marvell Technology to develop an inference-optimized TPU and a specialized Memory Processing Unit. This move highlights a broader industry pivot from expensive training chips to inference—the operation of finished models for user queries. The market for custom ASICs is forecast to grow 45% in 2026, compared to 16% for standard GPUs. Despite Marvell's potential entry, analysts from Counterpoint Research believe Broadcom will maintain a dominant market share of around 60%, even if Marvell captures roughly 25%.

Beyond Google, Broadcom's pipeline is fortified by other tech giants. A multi-year partnership with Meta Platforms, announced April 14, commits to the joint development of MTIA chips through 2029, with an initial commitment exceeding one gigawatt of computing capacity. Furthermore, a deal with Anthropic, valued at around $35 billion dependent on the startup's commercial progress, will see Broadcom supply 3.5 gigawatts of TPU capacity starting in 2027.

A less publicized but significant driver is the collaboration with OpenAI. Broadcom is co-developing custom AI accelerators with the ChatGPT maker, involving ten gigawatts of capacity. Deliveries are scheduled to begin in the second half of 2026 and conclude by the end of 2029. Mizuho analyst Vijay Rakesh, who recently met with CEO Hock Tan, has reinforced his Outperform rating. He now sees consensus AI revenue reaching $120 billion by 2027, up from an earlier target of $100 billion, with $132 billion possible in 2028.

Shareholders will gather in Palo Alto on April 20 for the company's annual meeting. The agenda includes electing eight directors and approving executive compensation, a plan where over 90% of CEO Hock Tan's pay is variable and stock-based. The multi-year performance shares are designed to secure his leadership through fiscal 2030.

The stock's recent performance has pushed its Relative Strength Index (RSI) to 74, signaling overbought conditions. Some analysts note the share price is trading approximately 18% above certain fundamental value estimates. A key risk remains Broadcom's exposure to China, which accounted for over 20% of total revenue in 2024. While semiconductors are currently exempt from new U.S. tariffs, this status could change.

All eyes are now on Broadcom's upcoming quarterly results, due in early June, which will test the company's ability to meet its ambitious $22 billion revenue forecast. The outcome will determine how much further the AI-driven rally has to run.