Shares in chipmaker Broadcom (AVGO) rose more than 5% on Tuesday afternoon following its multi-year chip deal with Alphabet’s (GOOGL) Google and AI startup Anthropic. Mizuho believes the chipmaker’s extended tensor processing unit (TPU) deal pushes the risk that Google will take its custom chip development process in-house towards 2031 or later
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A TPU is a specialized type of chip designed to be faster than general-purpose central processing units or even graphics processing units at handling AI workloads. As part of the deal, Broadcom will develop and supply custom TPUs all through 2031 that will help to supply 3.5 GW of computing power for Anthropic’s AI models.
Mizuho Flags Gains from the Deal
Mizuho analyst Vijay Rakesh is bullish on the new deal: he reaffirmed both his Buy rating and $480 price target on AVGO, predicting about 44% upside.
Rakesh is a five-star analyst who ranks 32 out of more than 12,000 analysts on Wall Street tracked by TipRanks. He has a 60% success rate and boasts an average return of 44.70% on TipRanks.
For Rakesh, the new deal signifies three key things:
- ASIC leadership: The analyst believes that the new deal is a boost for Broadcom’s leadership of the market for artificial intelligence application-specific integrated circuits (ASIC) all through around 2031. Rakesh sees the combined earnings from Google and Anthropic accounting for about 40 to 64% of Broadcom’s revenue
- $80B Revenue from 3.5G Capacity to Anthropic: In his assessment, Rakesh also focused on Anthropic, noting that the partnership comes as the AI startup has significantly grown its annual revenue run-rate from $9 billion per year in 2025 to currently $30 billion — more than three times growth. With plans to supply 3.5 gigawatts of capacity to Anthropic starting in 2027, Broadcom could generate cumulatively over $80 billion from supplying the TPU for this capacity.
- Delays COT Risk: The deal pushes forward the risk of Customer Owned Tooling (COT) at Google to around 2031, further solidifying Broadcom’s role as the key source of Google’s TPU compute capacity.
Is Broadcom a Buy, Sell, or Hold?
On Wall Street, Broadcom’s shares enjoy a Strong Buy consensus rating from analysts. This is based on 27 Buys and three Holds assigned over the past three months.
In addition, the average AVGO price target of $465.55 suggests about 39% upside.
