As Broadcom Expands AI Deals With Google and Anthropic, Should You Buy AVGO Stock?

Semiconductor and infrastructure software company Broadcom (AVGO) has strengthened its position in the artificial intelligence (AI) hardware ecosystem through expanded partnerships with Alphabet’s (GOOG) (GOOGL) Google and AI startup Anthropic.

According to a recent regulatory filing, Broadcom and Google have entered into a long-term agreement under which Broadcom will develop and supply custom Tensor Processing Units (TPUs) for future generations of Google’s AI chips. The agreement also includes a supply assurance arrangement that commits Broadcom to provide networking and related components for Google’s next-generation AI rack infrastructure through 2031.

In a separate development, Broadcom, Google, and Anthropic have expanded their existing strategic collaboration. Beginning in 2027, Anthropic is expected to access approximately 3.5 gigawatts of AI compute capacity through Broadcom as part of the multi-gigawatt TPU-based infrastructure committed to the AI company. The scale of this deployment reflects growing demand for high-performance computing capacity to train and run large artificial intelligence models.

However, the actual level of compute consumption will depend on Anthropic’s continued commercial success.

Notably, Broadcom’s custom AI accelerators, referred to as XPUs, are seeing strong demand. During its first-quarter earnings call, management indicated that this momentum is expected to continue as the next phase of XPU deployments begins across its five key customers, which include Google and Anthropic.

With AI-related demand accelerating and new long-term partnerships expanding its addressable market, Broadcom is strengthening its position as a key supplier of custom AI silicon and networking technology. Following a sharp rally earlier in the year, the stock has recently cooled off, offering an attractive entry point.

AI Demand to Power Broadcom’s Growth

Demand for AI infrastructure remains a major growth driver for Broadcom, with the semiconductor segment showing strong momentum. In the most recent quarter, semiconductor revenue reached $12.5 billion, up 52% year-over-year (YoY). The growth was primarily driven by AI-related semiconductor sales, which surged 106% YoY to $8.4 billion.

The growth trajectory is expected to strengthen further in the upcoming quarter. Management projects semiconductor revenue of $14.8 billion in Q2, up 76% YoY. AI semiconductor revenue is anticipated to be the primary driver, with forecasts indicating a sharp acceleration to $10.7 billion, up approximately 140% from the same period last year.

A significant contributor to this momentum is Broadcom’s custom accelerator business, which grew 140% YoY in the first quarter. The company continues to see strong demand from major technology partners. For example, deployments for Google are expected to expand in 2026. Looking further ahead, the next generation of TPUs is projected to drive even stronger growth beginning in 2027.

Additional demand is emerging from Anthropic. Broadcom’s XPU platform extends beyond TPUs and continues to gain traction with multiple hyperscale customers.

Broadcom is also seeing increasing engagement from other large customers, with shipments expected to rise meaningfully this year and more than double by 2027.

Its expanding partnership and multi-year supply agreements with large customers augur well for growth. Alongside accelerators, demand for AI networking is also accelerating. In the first quarter, AI networking revenue grew 60% YoY and accounted for roughly one-third of total AI revenue. Management expects networking to become an even larger contributor in the second quarter, potentially reaching 40% of AI revenue as hyperscale demand increases.

Overall, strong AI accelerator deployments, expanding customer partnerships, and rising networking demand position Broadcom to sustain robust revenue and earnings growth.

Here’s What Wall Street Forecasts for AVGO Stock

Wall Street remains bullish about AVGO stock and maintains a “Strong Buy” consensus rating. The average analyst price target of $466.65 implies a potential upside of more than 43% from recent trading levels.

Broadcom’s valuation metrics further support positive sentiment around AVGO stock. AVGO stock trades at a forward P/E ratio of approximately 32.5, which is reasonable given the company’s solid earnings growth trajectory. Consensus forecasts call for earnings growth of about 71.4% in fiscal 2026, followed by an additional 59.1% increase in fiscal 2027.

Broadcom’s expanding customer base, strong demand for its custom AI accelerators, and attractive valuation support its investment case.