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

TLDR

• OpenAI has partnered with Broadcom to co-develop 10 gigawatts of custom AI accelerators in a multiyear deal
• Broadcom’s AI semiconductor revenue is expected to double to $8.2B this year, with Q2 outlook at ~$10.7B
• Management pointed to over $100B in AI chip orders for Fiscal 2027, backed by 9–10 gigawatts of capacity
• The stock is down more than 24% from its December 2025 highs, but still up over 62% in the past 12 months
• Wall Street holds a “Strong Buy” consensus with an average price target of $471.74 — roughly 48% upside from current levels

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Broadcom (AVGO) is trading at $318.87, down over 24% from its December 2025 peak of $414.61.

Broadcom Inc., AVGO

Broadcom has quietly built itself into one of the most important names in the AI hardware race — and Wall Street is starting to take notice again.

The company, best known for its custom chip design work with the likes of Google and Microsoft, just added OpenAI to its growing roster of design partners. The two companies entered a multiyear agreement to co-develop 10 gigawatts of custom AI accelerators tailored specifically to OpenAI’s software needs.

That’s a direct shot across the bow for Nvidia, which OpenAI has relied on heavily for general-purpose GPU compute.

The OpenAI deal isn’t isolated. Broadcom also works with Amazon, Meta, and Microsoft on custom silicon. And at around the same time OpenAI signed its deal, Anthropic announced it was expanding its use of Google Cloud infrastructure — including 1 gigawatt of computing capacity using Google/Broadcom TPU chips.

The pattern is clear: major AI players are moving away from off-the-shelf Nvidia hardware and toward chips built for their specific workloads. Broadcom is the partner they keep calling.

A Business Built on More Than One Bet

Broadcom’s AI story isn’t just about custom chips. The company’s networking business — switches, digital signal processors, and interconnect tech — is quietly becoming a backbone of large-scale AI clusters.

As AI systems grow in complexity, moving data between chips fast enough becomes its own bottleneck. Broadcom’s Tomahawk switches and high-speed connectivity products are increasingly baked into the core architecture of scale-out AI infrastructure.

The company has also pushed back on the idea that copper connectivity is going away anytime soon. Management argues copper remains highly efficient within the rack up to certain speed thresholds — a position that, if correct, gives Broadcom more runway to monetize its current product lineup than some analysts have assumed.

Beyond hardware, the VMware acquisition still anchors a software segment that adds recurring revenue and margin stability — something most AI hardware pure-plays can’t claim.

Numbers That Are Hard to Ignore

For the full year 2025, Broadcom posted revenue of $63.8 billion, up 24% from 2024. Diluted EPS grew 40% over the same period. Net profit margin sits at 36.57%, with a debt-to-equity ratio of 0.83.

AI semiconductor revenue is projected to double to $8.2 billion in 2026. In the most recent quarter, AI revenue was already running at $8.4 billion, with the next quarter’s outlook pointing to roughly $10.7 billion.

Management also flagged more than $100 billion in AI chip orders booked for Fiscal 2027, supported by 9–10 gigawatts of capacity across a customer list that now includes Google, Meta, Anthropic, TikTok, Fujitsu, and OpenAI.

According to TipRanks, 27 of 29 Wall Street analysts rate AVGO a Buy. The average price target is $471.74, implying around 47.9% upside from the current price of $318.81.

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