Broadcom's Partnership with Google on TPU Shows Huge Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 23 2026
0mins
Should l Buy AVGO?
Source: Fool
- AI Revenue Surge: Broadcom's AI revenue more than doubled in Q1 2026, reaching $8.4 billion, reflecting a robust growth trajectory in the AI hardware sector that solidifies its market position.
- Total Revenue Growth: The company's total revenue for the quarter was $19.31 billion, a 29% increase from Q1 2025, indicating strong performance across multiple business segments and boosting investor confidence in its future prospects.
- Strong Profitability: Broadcom reported diluted earnings per share (EPS) of $1.50, up 32% year-over-year, with a net profit margin of 36.57%, showcasing its excellence in cost control and profitability enhancement.
- Strategic Partnerships: The collaboration with Google on TPU and significant orders from Anthropic worth $10 billion and $11 billion highlight Broadcom's critical role in AI chip design, with potential for further market share expansion in the future.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 313.490
Low
370.00
Averages
457.75
High
525.00
Current: 313.490
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Billionaire Steve Cohen Recommends Broadcom as Top Investment
- Significant Stake Growth: Steve Cohen's hedge fund has held shares in Broadcom (NASDAQ:AVGO) since Q2 2018, starting with 892,000 shares and increasing to over 7.7 million within a year, demonstrating strong long-term confidence in the company.
- Latest Holding Dynamics: As of Q4 2025, Cohen's fund holds nearly 2.9 million shares, an 80% increase from Q3 2025, reflecting optimistic expectations for Broadcom's future growth.
- AI Chip Revenue Projections: Broadcom anticipates its AI chip revenue will reach $100 billion by 2027, issuing a Q2 revenue guidance of $22 billion, representing a 47% YoY growth and exceeding Wall Street's expectations by $1.5 billion, indicating robust market demand.
- Exclusive Design Partnerships: As the exclusive design partner for Google, Meta, and OpenAI in custom silicon development, Broadcom creates a high-margin, recurring revenue stream, strengthening its competitive position in a challenging market.
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- Cloud Giants Performance: Alphabet and Microsoft are reaping significant returns from their cloud computing investments, with Azure and Google Cloud revenues increasing by 39% and 48% year-over-year, respectively, despite both companies' stock prices dropping over 20%, indicating their sustained market leadership.
- Investment Opportunities Arise: While skepticism surrounds AI stocks regarding uncertain returns, the long-term outlook remains bullish, suggesting that the current 20% drop in stock prices presents a prime buying opportunity for investors.
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- Mixed Market Response: Apple's slow progress in AI updates has raised consumer skepticism, despite plans to launch Apple Intelligence in 2024 with features like image generation and text rewriting, potentially affecting its competitive edge in the market.
- Capital Expenditure Control: Unlike rivals such as Amazon and Microsoft, which are committing hundreds of billions annually to AI infrastructure, Apple has kept its capital expenditures in check, a strategy that reduces short-term risks but places it at a disadvantage in generative AI.
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- Nvidia's Market Leadership: Nvidia's GPUs are complex logic chips supported by a robust ecosystem, having established itself as the premier growth stock in recent years, currently trading at a forward P/E ratio of 21 times, with estimates dropping to 16 times for the next fiscal year, indicating strong investment potential.
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- AI Chip Market Outlook: While Nvidia leads the AI chip market, Taiwan Semiconductor Manufacturing, as its chip manufacturer, is expected to play a significant role in future AI growth due to its diversified product line and broad market demand, thereby expanding its market opportunities.
- Broadcom's Growth Potential: Broadcom forecasts AI chip revenue exceeding $100 billion by 2027, successfully meeting strong customer demand with its custom chips, indicating robust growth potential in the AI sector.
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Billionaire Steve Cohen Recommends Broadcom as Top Investment
- Significant Stake Growth: Steve Cohen's hedge fund has held shares in Broadcom (NASDAQ:AVGO) since Q2 2018, starting with 892,000 shares and increasing to over 7.7 million within a year, demonstrating strong long-term confidence in the company.
- Latest Holding Dynamics: As of Q4 2025, Cohen's fund holds nearly 2.9 million shares, an 80% increase from Q3 2025, reflecting optimistic expectations for Broadcom's future growth.
- AI Chip Revenue Projections: Broadcom anticipates its AI chip revenue will reach $100 billion by 2027, issuing a Q2 revenue guidance of $22 billion, representing a 47% YoY growth and exceeding Wall Street's expectations by $1.5 billion, indicating robust market demand.
- Exclusive Design Partnerships: As the exclusive design partner for Google, Meta, and OpenAI in custom silicon development, Broadcom creates a high-margin, recurring revenue stream, strengthening its competitive position in a challenging market.
See More
Investment Opportunities Amid AI Stock Market Pullback
- Market Pullback Context: AI stocks are facing sell-offs due to uncertainty surrounding the Iran war and skepticism about AI spending returns; however, the long-term outlook remains bullish, presenting a buying opportunity for investors.
- Nvidia and Broadcom Competition: Nvidia's GPUs are considered the industry standard, with projected sales of $1 trillion for Blackwell and Rubin chips by 2027, while Broadcom is partnering with AI hyperscalers to design custom chips, expecting over $100 billion in annual revenue by 2027.
- Cloud Giants' Investments: Alphabet and Microsoft are seeing significant returns on their cloud computing investments, with Azure and Google Cloud revenues growing 39% and 48% year-over-year, respectively; despite both stocks being down over 20%, their investment value remains intact.
- Nebius's Rapid Growth: Nebius focuses on AI hardware and expects its annual revenue to soar from $1.25 billion to between $7 billion and $9 billion by the end of 2025, indicating strong demand for AI computing power, and with its stock down 30% from its all-time high, it presents a great investment opportunity.
See More
AI Demand Fuels Growth in Computing Units Market
- Strong Market Demand: The insatiable demand for AI is driving profits for cloud computing companies, with Nvidia projected to achieve $1 trillion in chip sales by 2027 and Broadcom's custom AI chips expected to generate over $100 billion in annual revenue.
- Cloud Giants Performance: Alphabet and Microsoft are reaping significant returns from their cloud computing investments, with Azure and Google Cloud revenues increasing by 39% and 48% year-over-year, respectively, despite both companies' stock prices dropping over 20%, indicating their sustained market leadership.
- Investment Opportunities Arise: While skepticism surrounds AI stocks regarding uncertain returns, the long-term outlook remains bullish, suggesting that the current 20% drop in stock prices presents a prime buying opportunity for investors.
- Emerging Company Surge: Nebius, focused on AI hardware, anticipates its annual revenue to soar from $1.25 billion to between $7 billion and $9 billion by the end of 2025, reflecting the rapid growth in demand for AI computing power, and its stock is down 30%, making it an attractive investment option.
See More
Apple Faces Challenges and Opportunities in the AI Era
- AI Strategy Shift: Apple has struck a multi-year deal with Google to utilize Gemini AI for a revamped Siri, which could impact user data privacy as Apple pays around $20 billion annually to maintain Google's default search engine status, necessitating careful management to avoid negative implications for its core business.
- Mixed Market Response: Apple's slow progress in AI updates has raised consumer skepticism, despite plans to launch Apple Intelligence in 2024 with features like image generation and text rewriting, potentially affecting its competitive edge in the market.
- Capital Expenditure Control: Unlike rivals such as Amazon and Microsoft, which are committing hundreds of billions annually to AI infrastructure, Apple has kept its capital expenditures in check, a strategy that reduces short-term risks but places it at a disadvantage in generative AI.
- Privacy and Technology Balance: CEO Tim Cook has emphasized that privacy is a
See More
Sandisk Thrives in NAND Supercycle Amid AI Boom
- Sandisk Stock Surge: Sandisk emerged as the best-performing stock in the Russell 1000 Index in Q1, with a staggering 194% increase in share price, driven by a NAND flash memory shortage that significantly boosted revenue and earnings growth.
- Nvidia's Market Leadership: Nvidia's GPUs are complex logic chips supported by a robust ecosystem, having established itself as the premier growth stock in recent years, currently trading at a forward P/E ratio of 21 times, with estimates dropping to 16 times for the next fiscal year, indicating strong investment potential.
- Broadcom's Growth Potential: Although Broadcom's current P/E ratio stands at 27.5 times, its explosive growth in the AI infrastructure market is expected to lower this to 17.5 times, highlighting its leadership in networking and custom AI chips.
- Importance of AI Infrastructure: As data centers expand, Broadcom's leading position in networking and ASIC technology becomes increasingly critical, enabling customers to convert chip designs into scalable physical chips, thereby enhancing its competitive edge in the market.
See More
The Magnificent Seven Tech Stocks Face Challenges
- Market Performance Decline: The Magnificent Seven tech stocks, which have excelled in the market over the past few years, have recently faced declines or stagnation due to concerns about AI revenue opportunities and uncertainties in the economic and geopolitical landscape, impacting investor confidence.
- AI Chip Market Outlook: While Nvidia leads the AI chip market, Taiwan Semiconductor Manufacturing, as its chip manufacturer, is expected to play a significant role in future AI growth due to its diversified product line and broad market demand, thereby expanding its market opportunities.
- Broadcom's Growth Potential: Broadcom forecasts AI chip revenue exceeding $100 billion by 2027, successfully meeting strong customer demand with its custom chips, indicating robust growth potential in the AI sector.
- Nebius's Rapid Growth: Nebius Group excels in the AI cloud services space, achieving annual recurring revenue of $1.25 billion, with expectations to grow to $7 billion to $9 billion this year, showcasing its competitiveness and future growth potential in the rapidly expanding AI market.
See More
