Broadcom (AVGO) stock is up, trading 4.28% higher at $348.27 at the time of writing, Wednesday morning, April 8, according to Yahoo Finance. The company settled an important question for many investors, and they are reacting positively.
The question is, how secure are Broadcom’s revenue streams? The company’s CEO, Hock Tan, previously addressed this question during the Q1 earnings call.
Tan specifically answered the question of whether LLM makers could start making their own chips without Broadcom’s help.
“They face tremendous challenges. You need the best silicon design team around. You need cutting-edge, really cutting-edge SerDes, very advanced packaging. We’ve been doing this for 20 years, more than 20 years in silicon.”
“I would say we are by far way out there, and we will not see competition in [customer-owned tooling (COT)] for many years to come,” he concluded.
However, that wasn’t enough, and the company’s 8-K filing from April 6 proved more convincing. The stock closed 6.21% higher the following day after the filing revealed important supply agreements with Google and Anthropic.
Broadcom extends partnerships with Google and Anthropic
Broadcom and Google entered into a long-term agreement for Broadcom to develop and supply custom Tensor Processing Units (TPUs) for Google’s future generations of TPUs.
The companies also entered into a supply assurance agreement under which Broadcom will supply networking and other components for Google’s next-generation AI racks through 2031.
In addition, Broadcom expanded its partnership with Google and Anthropic, under which Anthropic will, starting in 2027, access approximately 3.5 gigawatts of AI compute capacity through Broadcom.
“This groundbreaking partnership with Google and Broadcom is a continuation of our disciplined approach to scaling infrastructure: We are building the capacity necessary to serve the exponential growth we have seen in our customer base while also enabling Claude to define the frontier of AI development,” said Anthropic CEO Krishna Rao in a press release.
Bank of America analyst Vivek Arya and his team updated their opinion on Broadcom stock following the new supply agreements.
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Bank of America says TPU deals extend AVGO’s multi-year AI supply visibility
The team said they believe this deal solidifies Broadcom’s role as the main TPU design partner and addresses recent concerns that Google wants to insource more, switch to COT, or bring in other partners such as MediaTek.
Analysts said that Broadcom is well-positioned to gain AI accelerator market share in 2026 and 2027, and to grow from less than 10% in 2025 toward approximately 15%.
They noted that Google has historically been deploying its own networking solutions, separate from the TPUs, but with the new agreement, Broadcom can now supply networking into Google racks, including Taurus 1.6T DSPs for optical transceivers, Tomahawk 6 switches for scale-up, and others.
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They believe that Broadcom’s content is likely in the range of approximately $10 billion to $15 billion per 1 GW, with the agreement totaling more than $35 billion. According to the team, this is lower than AMD’s approximately $15 billion to 20 billion per 1 GW and Nvidia’s $25 billion to $30 billion per 1 GW.
They said this difference is because Broadcom provides just accelerator chips and networking switches, and does not provide CPUs or network interface cards.
Arya noted that the deployment would also depend on the company’s continued commercial success, adding that Anthropic’s new disclosure that its run-rate revenue has surpassed $30 billion represents good progress.
Analysts continue to see more than $30 of EPS power (including stock-based compensation) by 2030, as Broadcom’s custom application-specific integrated circuit programs provide multi-year visibility and as Broadcom’s networking wins gain more traction.
In a research note shared with me, Arya reiterated a buy rating for Broadcom stock and a target price of $450, based on a 26x multiple of his calendar-year 2027 price-to-earnings estimate.
Analysts noted downside risks for Broadcom:
- Semiconductor cycle risks
- High exposure to Apple and Google with potential design out risks
- Competitive risks in networking, smartphone, storage, and enterprise software markets
- Frequent acquirer of assets, which increases financial and integration risks
- Large $60 billion net debt
Related: Morgan Stanley resets Broadcom price target after earnings
