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Broadcom Shares Jump 3.7% Premarket on Google, Anthropic AI Deals

Broadcom shares increased 3.7% in premarket trading after the chipmaker announced deals to produce AI chips for Google and expand its partnership with Anthropic. The Anthropic deal includes 3.5 gigawatts of computing capacity using Google's processors. Despite a nearly 10% stock decline year-to-date due to tech market concerns and geopolitical tensions, CEO Hock Tan forecasts AI chip revenue to surpass $100 billion by 2027. Analysts responded positively, noting the deals provide revenue visibility and support long-term growth, with Citi reiterating a 'Buy' rating.

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Broadcom Shares Jump 3.7% Premarket on Google, Anthropic AI Deals

Broadcom Inc. shares surged 3.7% in premarket trading on Tuesday following announcements of AI chip production for Google and an expanded partnership with AI startup Anthropic.

Key Deals Announced

  • Broadcom will manufacture future versions of artificial intelligence chips for Google.
  • The expanded agreement with Anthropic grants the startup access to approximately 3.5 gigawatts of computing capacity, leveraging Google's AI processors.

Market Performance and Context

  • Broadcom stock has fallen nearly 10% year-to-date, reflecting investor nervousness about technology stocks and broader market volatility linked to U.S.-Israeli actions in Iran.
  • This decline occurred despite a robust earnings report in March where CEO Hock Tan highlighted strong demand for the company's chips.
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CEO Outlook

  • Hock Tan anticipates that AI chip revenue in 2027 will be "significantly in excess of $100 billion" as demand for custom silicon designs increases.

Analyst Reactions

  • Matt Britzman, senior equity analyst at Hargreaves Lansdown, stated: "The deal includes revenue commitments across that timeline, which should help ease some of the recent nervousness around TPU competition and give a clearer signal that its largest customer sees meaningful demand visibility well into the future."
  • Citi analysts maintained their 'Buy' rating for Broadcom, projecting that the company could exceed $130 billion in revenue, supported by the Google agreement.

— CNBC's Jordan Novet contributed to this report.

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