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share in broadcom Shares rose 3.7% in pre-market trading Tuesday after the chip designer announced it would produce future versions of artificial intelligence chips for Google and signed an expansion deal with Anthropic.
The latter deal would give the AI startup access to about 3.5 gigawatts worth of computing power and leverage Google’s AI processors, providing some cushion for the stock price.
Broadcom stock has had a tough start to 2025, falling nearly 10% since the beginning of the year as investors grow nervous about the bull market in tech stocks. It is also caught up in the broader market turmoil caused by the US and Israeli attack on Iran that began on February 28th.
This downward trend comes despite the company’s explosive earnings report in March, in which CEO Hock Tan touted strong future demand for its chips.
He told analysts last month that he expects AI chip revenue to be “well over $100 billion” in 2027 as demand for custom silicon designs increases.
Analysts remain bullish after Monday’s announcement.
“This deal includes revenue commitments across its schedule, which should help ease some of the recent tensions around TPU competition and give a clear signal that the company’s largest customer has meaningful demand prospects well into the future,” said Matt Blitzman, senior equity analyst at Hargreaves Lansdown.
“We are already seeing upside to our medium-term revenue and profit expectations on the back of our recent results. If things unfold as planned, these new deals will help support that idea.”
Citi analysts maintained their “buy” rating on the stock, saying they support Broadcom’s ability to exceed its $100 billion sales target and reach more than $130 billion thanks to its partnership with Google.
—CNBC’s Jordan Nobe also contributed to this report.
