BREAKING: On October 13, Broadcom Inc. (AVGO) and OpenAI announced a groundbreaking partnership to develop custom AI accelerators and Ethernet networking chips, aimed at supporting a staggering 10 gigawatts of data center capacity. This urgent collaboration signals a significant leap in the race for AI infrastructure, with deployment set to commence in the second half of 2026 and extend through 2029.
Broadcom’s shares surged by 10% intraday following the announcement, underscoring investor excitement about the deal’s potential impact on the rapidly growing AI market. This massive agreement surpasses the 6 gigawatts deal recently secured by Advanced Micro Devices (AMD) with OpenAI, highlighting the intense demand for generative AI solutions.
The implications of this partnership are profound. It not only cements Broadcom’s status as a formidable competitor to Nvidia in the realm of accelerated computing but also reflects the soaring need for robust AI infrastructure. As generative AI becomes increasingly vital to various sectors, Broadcom stands to benefit immensely by expanding its customer base and enhancing growth opportunities over the next five years.
OpenAI marks Broadcom’s fifth custom accelerator customer, following the announcement of a fourth unnamed client in September. The influx of these clients is projected to drive a significant revenue inflection starting in 2026 and 2027, building on existing orders.
In response to this game-changing partnership, analysts have adjusted their fair value estimate for Broadcom to $365 per share, up from $325, reflecting increased AI revenue expectations. With anticipated incremental revenue from accelerators and networking solutions, Broadcom is poised for remarkable growth leading up to 2029.
Broadcom has previously guided for $10 billion in new revenue in fiscal 2026 from its fourth customer, with hints of acceleration into fiscal 2027. However, with the new partnership with OpenAI, projections for AI revenue are set to double to $40 billion in fiscal 2026, and nearly double again in fiscal 2027. This trajectory presents a long-term growth runway for Broadcom, as existing customers are expected to increase orders for custom compute and networking chips to support their expanding AI models.
As the demand for AI infrastructure surges, Broadcom’s strategic alliance with OpenAI positions the company at the forefront of this technological revolution. Investors and industry watchers alike will be keenly observing how this partnership unfolds and what it means for the future of AI technology.
Stay tuned for updates as this story develops, as Broadcom continues to navigate the evolving landscape of artificial intelligence and its implications for global tech markets.
