Broadcom secured major custom AI chip contracts with Anthropic and OpenAI, significantly boosting its growth outlook. These deals potentially total $121 billion in revenue. The agreements are set to significantly expand Broadcom’s custom ASIC market share and reduce dependency on its largest customers.
The contracts include a confirmed $21 billion agreement with Anthropic, slated for 2026. A separate, decade-long deal with OpenAI is estimated to be worth around $100 billion for custom-developed chips.
This news follows Broadcom’s recent blockbuster earnings report. That report was driven by a 65% year-over-year increase in AI-related revenue for fiscal 2025.
Despite the strong fundamental news and positive analyst ratings, Broadcom’s stock has experienced a significant downturn, falling roughly 21% since the earnings release. The market’s negative reaction stems from investor caution regarding the company’s high valuation and management’s guidance for slightly lower gross margins due to the changing product mix.