Broadcom Inc. (AVGO) shares climbed more than 9% in Friday’s trading after the chipmaker revealed a $10 billion order for new AI chips. The company did not name the buyer, but reports from the Financial Times and Reuters suggested that OpenAI was the customer. The news hit Broadcom’s rival, AMD (AMD), hard, with its shares falling over 6%.
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The order is seen as a major step for Broadcom’s push into custom semiconductors. These chips are designed for companies that want an option beyond the higher-cost processors sold by Nvidia Corp. (NVDA). The chips will be built for internal use by the customer and are expected to start shipping in 2026.
Growth Outlook and Market Impact
Broadcom said the deal will lift its artificial intelligence revenue in fiscal 2026, with analysts now projecting that sales could reach well over $40 billion. That outlook comes after the company already reported strong results for its third quarter. Revenue rose to $15.95 billion, while artificial intelligence sales jumped 63% to $5.2 billion.
For the current quarter, Broadcom guided revenue of about $17.4 billion, above Wall Street forecasts. The company expects AI chip sales of $6.2 billion, up 66% from last year.
CEO Stability Adds Confidence
Adding to the rally, Chief Executive Hock Tan confirmed he will remain in charge through at least 2030. Tan has led the company for nearly twenty years and has played a central role in its growth into a key supplier for cloud and artificial intelligence markets. Meanwhile, Broadcom stock has already gained 45% year-to-date after more than doubling in 2024. If the latest surge holds, the company could add more than $200 billion to its $1.44 trillion market value.
What Is the Price Target for AVGO Stock?
On the Street, Broadcom boasts a Strong Buy consensus among analysts. The average AVGO stock price target is $375.58, implying a 12.15% upside from the current price.
