Broadcom shares jump on long-term AI chip and networking deals with Google

Investing.com -- Broadcom Inc (NASDAQ:AVGO) shares climbed 2.6% in after-hours trading Monday following the disclosure of major long-term agreements with Google (NASDAQ:GOOGL). The Monday filing reveals a deep commitment to co-developing custom silicon and networking infrastructure through the coming years.

Under the new terms, the companies entered into a "Long Term Agreement for Broadcom to develop and supply custom Tensor Processing Units (“TPUs”) for Google’s future generations of TPUs." This partnership ensures Broadcom remains the primary design partner for the specialized chips that power Google’s most advanced artificial intelligence models.

The collaboration also includes a "Supply Assurance Agreement for Broadcom to supply networking and other components to be used in Google’s next-generation AI racks through up to 2031." These components are critical for connecting massive clusters of chips required to train and run neural networks like Google’s Gemini.

Beyond the hardware production, the deal extends to third-party AI developers through a tri-party expansion involving Anthropic PBC. The filing notes that "Anthropic, beginning in 2027, will access through Broadcom approximately 3.5 gigawatts" of next-generation TPU-based compute capacity.

This massive allocation of power and silicon underscores the growing scale of AI infrastructure investments as firms race for dominance. Investors likely view the 2031 timeline as a significant signal of predictable, high-margin revenue for Broadcom’s custom ASIC business.

Wall Street continues to reward Broadcom’s unique position as a key beneficiary of the AI buildout alongside industry leader Nvidia. By locking in long-term commitments with hyperscale customers, the chipmaker continues to solidify its role at the center of the global AI supply chain.