TLDR
- Broadcom stock surged over 5.7% after expanding AI partnerships with Google and Anthropic
- Google and Broadcom locked in a long-term TPU and networking supply deal through 2031
- Anthropic confirmed it will access 3.5 gigawatts of TPU-based compute capacity through Broadcom starting 2027
- Broadcom’s Q1 AI revenue hit $8.4 billion, up 106% year-over-year
- Seaport Global Securities downgraded AVGO to Neutral, citing valuation concerns
Broadcom’s stock has been on a tear. After slipping below $300 in late March, AVGO climbed back to around $375 by April 10, fueled by a string of major AI partnership announcements and a broader market recovery.
The biggest news came on April 7, when Broadcom, Alphabet, and Anthropic jointly announced an expansion of their AI infrastructure partnerships. The stock jumped more than 6% that day alone.
Broadcom and Google formalized a long-term agreement for Broadcom to develop and supply future generations of Google’s Tensor Processing Units. The two companies also signed a Supply Assurance Agreement for Broadcom to provide networking components for Google’s next-generation AI racks through 2031.
Networking equipment made up one-third of Broadcom’s AI revenue last quarter, so that part of the deal carries real weight.
Google has been Broadcom’s largest and longest-standing custom chip customer. The renewed deal spans multiple future TPU generations, giving Broadcom unusually strong revenue visibility with its most important customer.
Anthropic Deal Adds Billions in Future Revenue
The Anthropic piece of the announcement is where things get interesting. Starting in 2027, Anthropic will access approximately 3.5 gigawatts of TPU-based AI compute capacity through Broadcom.
Analyst Stacy Rasgon at Bernstein has estimated that Broadcom generates around $20 billion in revenue per gigawatt. That math puts the Anthropic commitment in striking territory.
Previously, Broadcom had said Anthropic’s demand was “expected” to exceed 3 gigawatts. The new announcement upgrades that language — Anthropic “will” access over 3.5 gigawatts, with Broadcom suggesting this is part of a larger, longer-term commitment.
Broadcom did add a caveat: the expansion depends on Anthropic’s “continued commercial success.” But that bar looks easy to clear right now. Anthropic’s annual revenue run rate went from $9 billion at end of 2025 to $30 billion by early April — a tripling in just three months.
Strong Earnings Provide a Solid Foundation
The partnership news landed on top of already-solid fundamentals. Broadcom reported Q1 EPS of $2.05, beating the $2.03 consensus estimate, on revenue of $19.31 billion against a $19.10 billion forecast.
AI revenue for the quarter came in at $8.4 billion, up 106% year-over-year, driven by demand for custom AI accelerators and networking products.
A Pakistan-brokered two-week ceasefire between Iran and the US, announced April 7, also lifted broader market sentiment. With a beta of 1.24, Broadcom tends to move more than the market in both directions, and the risk-on environment gave the stock an extra push.
Not everyone is bullish. Seaport Global Securities downgraded AVGO to Neutral, arguing that AI-driven gains are already priced into consensus estimates and that near-term upside is limited. The market largely shrugged off the note.
Broadcom’s annual revenue run rate has increased from $9 billion to $30 billion in Anthropic, its newest major customer, in just three months.
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