Broadcom announced major AI infrastructure agreements with Anthropic and Google on Monday, driving a 3% stock increase and prompting overwhelmingly positive analyst ratings with price targets suggesting up to 80% upside.
Key AI Partnerships Secured
- Broadcom will supply multiple gigawatts of next-generation tensor processing unit (TPU) capacity to Anthropic, supporting its Claude AI infrastructure.
- A separate deal with Google extends Broadcom's production of AI hardware through 2031, deepening a long-term strategic relationship.
Analyst Reactions and Price Targets
- 49 of 51 analysts covering Broadcom have buy or strong buy ratings, per LSEG data, reflecting strong confidence in AI growth.
- Notable price targets include:
- Bernstein: $525 (67% upside)
- Melius Research: $575 (nearly 83% upside)
- Citi: $475 (51% upside)
- Wells Fargo and Deutsche Bank: $430 (36.8% upside each)
- Jefferies: $500 (59% upside)
- Analysts cite the deals as validating Broadcom's expanding total addressable market in AI, with AI revenue projections now exceeding $120 billion by fiscal year 2027.
Market Performance and Revenue Outlook
- Broadcom shares have surged nearly 112% over the past year, outperforming broader markets.
- Previous guidance for AI revenue was around $100 billion for 2027, but analysts see upside due to new contracts, with every $10 billion in revenue adding roughly $1 to EPS.
- Anthropic's annual recurring revenue has grown to $30 billion, enhancing the value of Broadcom's supply commitments, which now include 4.5 gigawatts of chip capacity over the next two years.