The Kaipher Editorial Team 
Broadcom shares surged 9% in premarket trading Friday after the chipmaker announced a $10 billion artificial intelligence chip deal with a new customer, believed to be OpenAI, fueling optimism about its strategy to design custom semiconductors as an alternative to pricier Nvidia chips.
The blockbuster order represents a significant milestone for Broadcom’s custom silicon strategy, with CEO Hock Tan projecting “significantly improved” AI revenue growth for fiscal year 2026. The deal comes as the company deepens its role in the generative AI boom by designing custom semiconductors for cloud giants seeking alternatives to Nvidia’s more expensive graphics processing units.
OpenAI Partnership Drives Market Speculation
Multiple reports from the Financial Times indicate that OpenAI is the unnamed customer behind Broadcom’s $10 billion order. The ChatGPT maker is working with Broadcom to develop its first custom AI chips, expected to begin shipping in 2026. According to sources familiar with the partnership, OpenAI plans to use these chips internally rather than selling them to third parties.
Analysts from J.P. Morgan, Bernstein, and Morgan Stanley all suggested that the timing and magnitude of the deal point to OpenAI’s involvement. The partnership follows a trend among major tech companies, including Google, Amazon, and Meta, which have developed their own specialized chips to support AI workloads and reduce dependence on Nvidia.
Leadership Continuity Provides Additional Boost
Adding to investor confidence, CEO Hock Tan announced he would remain in his leadership role through at least 2030, providing stability during a critical growth period for the company. Tan, who has led Broadcom for nearly two decades and steered it to the center of the AI boom, called this “an exciting time for Broadcom”.
The announcement helped drive additional momentum for the stock, which has already gained 32% this year following the company’s market valuation crossing $1 trillion in December. If premarket gains hold, Broadcom could add roughly $125 billion to its current $1.44 trillion market capitalization.
Strong Quarterly Performance Supports Outlook
Broadcom’s fiscal third-quarter results provided the foundation for the stock surge, with the company reporting revenue of $15.95 billion and adjusted earnings per share of $1.69, both exceeding analyst expectations. AI-related revenue jumped 63% to $5.2 billion during the quarter.
For the fourth quarter, Broadcom forecasts revenue of approximately $17.4 billion, surpassing Wall Street estimates of $17.01 billion. The company expects AI semiconductor revenue to reach $6.2 billion in the current quarter, representing 66% year-over-year growth.
Wall Street analysts responded positively to the results and outlook, with multiple firms raising price targets. Morgan Stanley increased its target to $382 from $357, while both BofA Securities and Barclays raised theirs to $400. JPMorgan analyst Harlan Sur boosted the price target to $400 from $325, calling the new deal a “turning point” for Broadcom’s AI revenue outlook.
