broadcom Shares rose 6% in after-hours trading Wednesday after Google announced a surge in revenue and capital spending for artificial intelligence.
google announced Wednesday that it expects to spend up to $185 billion on capital spending this year, nearly double what it spent last year.
Ben Reitzes, director of technology research at Melius Research, said the capital investment will be a boon for Broadcom and other Alphabet-related companies.
“This is an unbelievable number. We’re all laughing because it’s such a good number for the Google group,” Reitzes said on CNBC’s “Closing Bell Overtime” after the announcement.
Google is one of the few technology companies that is increasing spending on capital expenditures to build data centers focused on artificial intelligence.
Much of Google’s AI software doesn’t work with industry standards Nvidia It’s not on a chip, but on its own tensor processing unit. For example, Google’s cutting-edge Gemini 3 model is powered by a TPU. Broadcom supports Google’s TPU manufacturing.
Broadcom has a fast-growing custom business focused on chips called ASICs, which some experts believe may be more efficient for some artificial intelligence workloads. Broadcom announced in December that it would sell Google’s TPU Ironwood rack system to Anthropic, another artificial intelligence lab.
Experts say custom AI chips only make sense for the largest and most sophisticated companies, often called hyperscalers. Broadcom calls the custom chips it is currently developing for five separate customers “XPUs.”
In addition to Google’s TPU, microsoft, Amazon and meta Broadcom has not named any customers other than Google and Anthropic, but it is working on developing its own custom chips.
Hyperscalers typically need a semiconductor industry partner like Broadcom to add the necessary intellectual property and help manufacture the chips.
Google also uses Nvidia chips. Nvidia shares rose 2% in after-hours trading.
“It’s probably good for Nvidia, too, because they’re going to spread the love to Nvidia as well as their own TPUs,” Reitzes said.
