Broadcom Stock Climbs 5 Percent to Three-Week High Following Major Long-Term Chip Deals with Google and Anthropic

Broadcom Soars 5% Amid AI Infrastructure Boom

Shares of Broadcom, the seventh-most valuable company in the S&P 500, jumped 5% in Thursday's trade, reaching a three-week high of $330 per share, despite key Wall Street averages trading lower. The rally in the stock on 6 April was triggered by the chipmaker's announcement of a long-term agreement with Google to develop and supply Tensor Processing Units (TPUs).

The agreement, which runs through 2031, centers on TPUs, which Broadcom will help develop for Google's AI data centers. Anthropic, an AI startup, will also gain access to 3.5 gigawatts of computing capacity from Google's AI chips starting in 2027. The TPUs will be used to train and deploy frontier Claude models to meet the growing demand for the company's technology offerings from customers worldwide.

In its filing on Monday, Broadcom revealed that it has entered into a long-term agreement with Google to supply future generations of the internet giant's TPUs, designed to power artificial intelligence in data centers. The partnership comes at a time when Broadcom's business is performing well, with the company continuing to update its networking equipment to better connect the computing power required to run artificial intelligence models.

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The growing demand for AI infrastructure is expected to boost spending by companies such as Alphabet, Microsoft, Amazon, and Meta Platforms, with an estimated $600 billion to be allocated for building AI infrastructure this year. This surge in demand is expected to drive chip revenue, with Broadcom projecting AI chip revenue of $10.7 billion for the current quarter.

Despite the recent rally, Broadcom shares are still down about 21% from the December record high of $414.60. The sell-off is part of a broader rotation by investors away from the largest technology companies due to concerns about the sustainability of the hundreds of billions of dollars being committed to developing artificial intelligence capabilities.