Broadcom Ramps Up AI Ambitions With High-Stakes OpenAI Deal

Broadcom AVGO has evolved from a smartphone component supplier into a major player in artificial intelligence chips and networking solutions, capitalizing on rising demand from tech giants building large-scale data centers. The stock gained attention Monday following reports of its partnership with OpenAI.

The collaboration, first reported by the Financial Times, involves Broadcom developing custom AI chips to alleviate the processor shortages that have hindered the rollout of new ChatGPT models.

OpenAI CEO Sam Altman had previously flagged the GPU shortage in February as a key bottleneck delaying ChatGPT-4.5. Broadcom confirmed the agreement during its earnings call, disclosing a $10 billion one-time order from its new customer, which people familiar with the matter identified as OpenAI.

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The announcement propelled Broadcom shares up nearly 11% on Friday, the Wall Street Journal reported.

Year-to-date, Broadcom stock has surged more than 44%. The OpenAI partnership complements the company’s broader strategy to secure computing power, which includes a $30 billion annual data center deal with Oracle ORCL, contracts with Alphabet’s GOOGL GOOG Google, and construction of its own Stargate facility.

Broadcom CEO Hock Tan described the new orders as generating “immediate and pretty substantial demand,” revising the company’s fiscal 2026 AI revenue outlook upward from prior projections of 50%–60% growth, Bloomberg reported.

Analysts expect the chips will allow OpenAI to reduce dependence on Nvidia NVDA while optimizing processors for its proprietary models. Bloomberg noted the two companies are also collaborating on an inference chip designed for post-training AI applications.

Financially, Broadcom’s AI semiconductor sales reached $5.2 billion in the most recent quarter and are projected to hit $6.2 billion in the fourth quarter. Overall revenue climbed 22% year-over-year to nearly $16 billion, surpassing analyst expectations. Tan also confirmed he will remain CEO through at least 2030.

Price Action: AVGO stock is trading higher by 5.68% to $353.91 at last check Monday.

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