Broadcom expands its AI chip deal with Google and Anthropic, with the stock up 3% and Citigroup projecting $130 billion in revenue

CNBC reports that Broadcom has announced a new agreement with Google to produce next-generation custom AI chips, and it has also expanded its cooperation arrangements with Anthropic. The double positive catalysts drove Broadcom’s (AVGO) stock price up more than 3% in premarket trading on Tuesday.

Anthropic gets 3.5 gigawatts of computing power, powered by Google AI processors

The agreement with Anthropic will provide this AI startup with about 3.5 gigawatts of computing power, sourced from Google’s AI processors (TPUs). This arrangement is significant for Anthropic, whose compute demand continues to rise, and it also eases concerns from outside that Broadcom could face competitive pressure in its relationship with its largest customer, Google.

Broadcom’s stock is down nearly 10% this year—good news comes at the right time

Broadcom’s stock has fallen nearly 10% year-to-date, partly due to market turbulence triggered after the U.S. and Iran launched a military action on February 28. The announcement of this agreement has provided support for the stock that has been undergoing a correction.

Of note, Broadcom delivered strong results in its March earnings report. CEO Hock Tan told analysts that it expects AI chip revenue in 2027 to “substantially exceed $100 billion,” highlighting its high confidence in long-term demand for its custom AI chips (ASICs).

Analyst reaction: Citigroup raises its target to more than $130 billion

After the new agreement was announced, Citigroup analysts maintained a “buy” rating and forecast that Broadcom could use support from this agreement to raise its revenue target from $100 billion to above $130 billion.

Hargreaves Lansdown senior stock analyst Matt Britzman also said the agreement covers revenue commitments across the entire time horizon, helping to eliminate recent market concerns about TPU competition, and clearly conveying a visibility signal of future demand from Google, its largest customer. He added that Broadcom’s mid-term earnings expectations have been raised due to the recent earnings report, and that if this new agreement is deployed as scheduled, it will further strengthen that direction.

This article about Broadcom, Google, and Anthropic signing an expanded AI chip agreement, with the stock rising 3%, and Citigroup looking for $130 billion in revenue first appeared on LianNews ABMedia.