19 October, 2025
broadcom-and-openai-join-forces-major-ai-deal-unveiled

BREAKING NEWS: In a game-changing announcement, Broadcom (AVGO) and OpenAI have just confirmed a significant partnership, set to reshape the landscape of artificial intelligence. This collaboration will focus on the sales of custom AI accelerators and Ethernet networking chips, supporting an impressive 10 gigawatts of data center capacity. The deployment is slated to begin in the second half of 2026 and continue through 2029.

The news sent Broadcom’s shares soaring by 10% intraday, reflecting strong investor sentiment. This deal marks a pivotal moment in the AI industry, surpassing a recent agreement between Advanced Micro Devices (AMD) and OpenAI, which only covered 6 gigawatts of capacity. The announcement underscores the escalating demand for infrastructure supporting generative artificial intelligence.

This partnership not only solidifies Broadcom’s position as a formidable competitor to Nvidia (NVDA) in accelerated computing but also highlights the company’s strategic expansion in the booming AI market. OpenAI is now Broadcom’s fifth custom accelerator client, following the signing of a previously unnamed customer in September. Analysts predict that these partnerships will drive a significant revenue spike for Broadcom starting in 2026 and into 2027.

The implications of this deal are monumental. Broadcom has adjusted its fair value estimate for its shares from $325 to $365, reflecting increased expectations for AI-driven revenue growth. This adjustment comes as the company anticipates an astounding $10 billion in new revenue from its fourth customer and expects AI revenue to nearly double to $40 billion in fiscal 2026, with projections indicating even more robust growth in fiscal 2027.

As Broadcom continues to partner with major AI model builders, the potential for expanding its customer base and revenue stream is enormous. The company expects existing customers to increase orders for custom compute and networking chips as they scale their AI models. Moreover, the likelihood of additional customers entering the fold is high, providing Broadcom with a long-term growth runway.

The bottom line is clear: Broadcom is positioning itself at the forefront of AI infrastructure, and this latest deal with OpenAI is a testament to its robust strategy and market demand. Investors and industry watchers should stay tuned as developments unfold, as Broadcom aims to capitalize on the generative AI boom.

The urgency of this announcement cannot be overstated. As the AI landscape evolves rapidly, Broadcom’s strategic moves today could have lasting impacts well into the future.