Broadcom Just Landed Game-Changing AI Deals. Is AVGO a Buy Now?

Broadcom (AVGO) has grabbed investor attention after securing major multi-year AI chip deals with Alphabet’s (GOOG) (GOOGL) Google and rising AI powerhouse Anthropic. The stock climbed 6.2% yesterday with the expectation that these deals will solidify  Broadcom’s position as the key backbone of AI infrastructure for years. They signal long-term visibility into both revenue and relevance in the rapidly expanding AI chip market.

AVGO stock is up just 1% year-to-date (YTD), compared to the tech-heavy Nasdaq Composite Index ($NASX) dip of 2.5%. Is this the right time to grab AVGO stock now?

What Are These Game-Changing AI Deals?

Valued at $1.6 trillion, Broadcom is a semiconductor and infrastructure technology company that designs specialized chips and software used in data centers, networking, broadband, and wireless communications.

Recently, Broadcom announced two major long-term AI agreements. The company signed a deal with Google to design and supply future generations of custom AI chips, including TPUs (Tensor Processing Units) for its advanced AI systems until 2031. In addition, Broadcom partnered with AI startup Anthropic to enable access to roughly 3.5 gigawatts of computing capacity starting in 2027, leveraging Google’s AI processors. 

Simply put, Broadcom will be building the core hardware that runs and scales their AI systems. And since these are long-term agreements, it reduces the risk of customers moving away to alternatives while also ensuring predictable, multi-year revenue related directly to AI growth. Notably, AI semiconductors have been the company’s dominant growth engine. In the first quarter of fiscal 2026, AI chip revenue alone surged 106% to $8.4 billion, leading to a total revenue increase of 29% to $19.3 billion. Management expects Q2 revenue to surge 47% year-over-year (YoY) to $22 billion, with AI semiconductor revenue up 140% to $10.7 billion. The company has a clear path to generating over $100 billion in AI chip revenue by 2027 alone.

Wall Street Cheered Broadcom’s New Deals

Wall Street analysts were impressed with Broadcom signing these long-term agreements. According to William Blair analyst Sebastien Naji, this long-term agreement with Google is an assurance that the company will not abandon Broadcom "in favor of a customer-owned-tooling (COT) approach." He ranks AVGO shares as an "Outperform."

According to JPMorgan's Harlan Sur, these deals show that demand for Broadcom's custom AI chips is not only consistent but also expanding, emphasizing the company's position in a burgeoning market. Meanwhile, Jefferies analyst Blayne Curtis believes that these agreements would ensure a consistent baseline of demand, particularly for TPU-related chips. This means that Broadcom might generate substantial, consistent revenue over time. Both analysts give AVGO an “Overweight” rating and a $500 price target.

Separately, Mizuho analyst Vijay Rakesh views both agreements as a catalyst for Broadcom’s dominance in AI-focused custom chips through the end of the decade. He believes both partnerships could drive at least 40% to 64% of the company’s revenue, ensuring Broadcom remains a critical supplier for years to come while supporting strong upside potential for the stock. Rakesh has a “Buy” rating and a price target of $480.

Analysts expect Broadcom’s earnings to increase by 66.4% in fiscal 2026 to $11.35 per share, followed by a 57% increase in fiscal 2027 to $17.80 per share. 

Overall, Wall Street remains highly optimistic of Broadcom’s long-term AI prospects, rating it a “Strong Buy.” Of the 42 analysts, 36 analysts rate the stock a “Strong Buy,” three say it is a “Moderate Buy,” and three say it is a “Hold.” Based on its average target price of $466.65, the stock has an upside potential of 40% from current levels. Plus, its high price target of $630 suggests the stock can climb by 88.6% over the next 12 months. 

Is AVGO a Buy Now?

Broadcom stands out for its unique positioning in custom AI chips and its ability to monetize that demand at scale. While not without risks, its latest deals suggest that AVGO could remain a major winner in the AI era for years to come. At the current levels, AVGO remains a great buy-and-hold AI stock.