OpenAI Partners with Broadcom to Develop AI Hardware
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 26 2026
0mins
Source: NASDAQ.COM
- AI Hardware Collaboration: OpenAI has entered a multi-year partnership with Broadcom to co-develop 10 gigawatts of custom AI accelerators tailored to OpenAI's software needs, thereby reducing reliance on Nvidia's general-purpose hardware, indicating a shift in the competitive landscape of the AI hardware market.
- Doubling AI Chip Revenue: Broadcom anticipates its AI semiconductor revenue will double to $8.2 billion in 2025, reflecting not only the rising demand for custom chips but also the effectiveness of Broadcom's strategic positioning in the AI sector.
- Strong Financial Performance: Broadcom's revenue is projected to grow by 24% in 2025 compared to 2024, reaching $63.8 billion, with diluted earnings per share (EPS) increasing by 40% and a net profit margin of 36.57%, showcasing the company's competitive edge and profitability in the AI hardware market.
- Intensifying Industry Competition: As companies like OpenAI and Anthropic shift towards custom chips, Broadcom's market position may strengthen further, especially given its partnerships with Google, Microsoft, and Amazon, which enhance its influence in the industry.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to fall
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 481.570
Low
370.00
Averages
457.75
High
525.00
Current: 481.570
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.
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- Retail Investor Sentiment: Over the past week, sentiment for Broadcom on Stocktwits has surged, with message volume increasing over 700%, indicating that retail investors are extremely optimistic about the upcoming earnings report, with many traders expecting a significant stock price jump post-announcement.
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See More
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See More
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See More
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See More
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- AI Chip Sales Guidance Miss: Despite a 143% year-over-year increase in AI chip sales to $10.8 billion, the company projected third-quarter sales at $16 billion, below analysts' expectations of $17.2 billion, resulting in a more than 12% drop in after-hours trading.
- Strong Net Income and Cash Flow: Broadcom reported a net income of $12.07 billion, up 55% year-over-year, with free cash flow at $10.26 billion, demonstrating robust financial health despite capital expenditures of $231 million.
- Negative Market Reaction: Although Broadcom's stock is up 38% this year, the market reacted poorly due to the unchanged $100 billion annual AI chip sales target, with analysts suggesting this reflects an expectation reset rather than damage to the fundamentals.
See More
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- Negative Market Reaction: Despite maintaining its $100 billion AI chip sales target, which fell short of analysts' expectations of $17.2 billion, Broadcom's stock dropped over 12% in after-hours trading, reflecting investor apprehension about future growth prospects.
- Long-Term Growth Potential: Broadcom's partnerships with six core customers, including Alphabet, are driving AI revenue growth, with the CEO stating that AI semiconductor revenue is expected to exceed $100 billion in fiscal year 2027, highlighting the company's strategic positioning in the AI market.
See More
