Broadcom (AVGO) Stock Approaches All-Time High Following Deals with Meta and Google

Summary

• Broadcom’s share price has climbed 21% over the last fortnight, reaching $393 during Tuesday’s post-market session.
• A partnership between Meta and Broadcom for custom AI processors has been lengthened until 2029, starting with a commitment exceeding one gigawatt of power.
• The agreement with Meta involves 2nm AI silicon designed for training and inference tasks under the MTIA initiative.
• Broadcom’s collaboration with Google is set to continue until 2031, focusing on upcoming Tensor Processing Units (TPUs) and networking hardware.
• Market analysts maintain a Strong Buy rating on AVGO, setting a mean price target of $464.32, which suggests a potential 22% increase.

(SeaPRwire) –   Broadcom has emerged as a prominent yet understated player in the AI hardware sector, and its profile is rising. The company’s stock rose 3% in after-hours trading on Tuesday to hit $393, concluding a 21% increase over two weeks. This surge brings the price close to its record high of $414.61.

Broadcom Inc., AVGO

The momentum is driven by two significant long-term contracts that solidify Broadcom’s position as a premier designer of bespoke AI chips for major technology firms.

On Tuesday, Meta and Broadcom revealed an expanded collaboration lasting until 2029. As part of the deal, Broadcom will develop and provide advanced AI processors utilizing a 2nm production technique.

These components are part of Meta’s MTIA (Meta Training and Inference Accelerator) project, intended to support ranking, recommendation, and AI inference operations across Meta’s platforms.

The initial power commitment exceeds one gigawatt, equivalent to the energy needs of approximately 750,000 American households. Meta indicated this is the beginning of a larger, multi-gigawatt expansion.

Meta CEO Mark Zuckerberg noted that the partnership will assist in “constructing the extensive computing infrastructure required to provide personalized superintelligence to billions.”

Furthermore, Meta will utilize Broadcom’s Ethernet networking solutions to link its expanding AI server clusters.

In conjunction with the agreement, Broadcom CEO Hock Tan is resigning from Meta’s board of directors to serve as a consultant on custom chip strategies.

Google Partnership Provides Further Support

In addition to the Meta announcement, Broadcom maintains a long-standing alliance with Alphabet that now extends to 2031. This contract involves the creation of next-generation Google Tensor Processing Units (TPUs) and the delivery of essential networking components.

TPUs are specialized chips developed by Google to manage large-scale AI and machine learning tasks. Securing Broadcom as a partner through the end of the decade underscores the firm’s importance in the custom silicon market.

Combined, these two agreements establish Broadcom as a vital infrastructure provider for two of the world’s most significant AI investors.

Insider Sales vs. Analyst Optimism

While the stock performs well, some insiders are reducing their holdings. Senior executive S. Ram Velaga recently offloaded 8,000 shares for roughly $2.96 million, while board member Gayla Delly sold 1,000 shares for about $358,310.

Selling by insiders near peak prices is common, though it is notable as the stock nears its all-time high.

Wall Street remains bullish, however. Broadcom carries a Strong Buy consensus, supported by 27 Buy ratings and four Hold ratings over the last quarter.

The mean price target from analysts is $464.32, indicating a possible 22% gain from current prices.

AVGO was last priced at $393 in Tuesday’s after-hours trading, with its record of $414.61 remaining a near-term target.