Broadcom (AVGO) Stock: OpenAI Partnership, $100B AI Orders — Time to Buy the Dip?

TLDR

• OpenAI has entered into a multiyear agreement with Broadcom to jointly develop 10 gigawatts of custom AI accelerators.
• Broadcom’s revenue from AI semiconductors is anticipated to reach $8.2 billion this year, with a second-quarter outlook of approximately $10.7 billion.
• Management has indicated over $100 billion in AI chip orders for Fiscal 2027, supported by 9–10 gigawatts of capacity.
• The stock has experienced a decline of over 24% from its December 2025 peak, though it remains up more than 62% over the past 12 months.
• Wall Street analysts maintain a “Strong Buy” consensus, with an average price target of $471.74, suggesting approximately 48% potential upside from current levels.

(SeaPRwire) –   Broadcom (AVGO) is currently trading at $318.87, marking a decrease of over 24% from its high of $414.61 reached in December 2025.

Broadcom Inc., AVGO

Broadcom has steadily established itself as a significant player in the AI hardware sector, and Wall Street is once again paying close attention.

The company, recognized for its custom chip design collaborations with major tech firms like Google and Microsoft, has now added OpenAI to its list of design partners. The two entities have established a multiyear partnership to co-develop 10 gigawatts of custom AI accelerators specifically engineered to meet OpenAI’s software requirements.

This development represents a direct challenge to Nvidia, which has been a primary provider of general-purpose GPU compute for OpenAI.

The OpenAI agreement is not an isolated event. Broadcom also collaborates with Amazon, Meta, and Microsoft on custom silicon solutions. Concurrently with OpenAI’s deal, Anthropic announced an expansion of its use of Google Cloud infrastructure, which includes 1 gigawatt of computing capacity utilizing Google/Broadcom TPU chips.

The trend is evident: leading AI companies are shifting away from standard Nvidia hardware towards chips optimized for their specific operational needs, with Broadcom being a preferred partner.

A Business Built on More Than One Bet

Broadcom’s AI strategy extends beyond custom chips. The company’s networking division, encompassing switches, digital signal processors, and interconnect technologies, is becoming a foundational element for large-scale AI clusters.

As AI systems become more complex, efficient data transfer between chips emerges as a critical challenge. Broadcom’s Tomahawk switches and high-speed connectivity products are increasingly integrated into the core architecture of scalable AI infrastructure.

Furthermore, the company has countered the notion that copper connectivity is becoming obsolete, asserting that copper remains highly efficient within racks up to certain speed thresholds. This perspective, if accurate, suggests Broadcom has a longer period to capitalize on its current product offerings than some analysts have projected.

In addition to its hardware offerings, the acquisition of VMware bolsters a software segment that contributes consistent revenue and margin stability, a characteristic not typically found in companies focused solely on AI hardware.

Numbers That Are Hard to Ignore

For the entirety of 2025, Broadcom reported revenue of $63.8 billion, a 24% increase from 2024. Diluted earnings per share (EPS) saw a 40% growth during the same period. The company maintains a net profit margin of 36.57% and a debt-to-equity ratio of 0.83.

Revenue from AI semiconductors is projected to double to $8.2 billion in 2026. In the most recent quarter, AI revenue was already at $8.4 billion, with the outlook for the upcoming quarter indicating approximately $10.7 billion.

Management also highlighted that over $100 billion in AI chip orders have been secured for Fiscal 2027, supported by 9–10 gigawatts of capacity from a customer base that now includes Google, Meta, Anthropic, TikTok, Fujitsu, and OpenAI.

According to TipRanks, 27 out of 29 Wall Street analysts have rated AVGO as a Buy. The average price target stands at $471.74, implying an approximate 47.9% potential upside from the current price of $318.81.