Broadcom Stock Surges on OpenAI Custom AI Chip Partnership
The multi-year deal will see Broadcom develop 10 gigawatts of custom AI silicon, marking a strategic push by OpenAI to reduce its reliance on Nvidia.
Broadcom (AVGO) shares surged nearly 10% after the company announced a major multi-year partnership with OpenAI to develop and deploy custom artificial intelligence chips. The deal positions Broadcom as a critical hardware partner for the creator of ChatGPT, which is aggressively building out its own infrastructure to power its next generation of AI models.
The strategic collaboration will involve deploying 10 gigawatts (GW) of custom AI accelerators and rack-level systems. While OpenAI will lead the design of the custom silicon, Broadcom will manage the development and deployment, which is expected to begin in the second half of 2026. Financial terms were not disclosed, but the deal is and underscores the immense capital investment required for cutting-edge AI.
This partnership is a key component of OpenAI's strategy to gain more control over its hardware stack and lessen its dependence on third-party suppliers, most notably Nvidia, which currently dominates the AI chip market. By co-designing its own accelerators, optimized for its specific workloads, potentially yielding greater efficiency and performance.
For Broadcom, the agreement solidifies its pivot into the high-growth market for custom silicon. The company will provide advanced networking and hardware, including its Ethernet, PCIe, and optical connectivity solutions, which are crucial for building large-scale AI clusters. Analysts highlighted the significant revenue potential, noting that the deal highlights as AI infrastructure spending continues to accelerate.
However, some market observers have adopted a more cautious tone. While the partnership is a clear win for Broadcom, some analysts suggest the substantial growth expectations may already be priced into the company's high valuation. Furthermore, concerns have been raised about the massive capital expenditures and complex financing arrangements in the AI sector, with some warning of an . The success of the venture will ultimately depend on OpenAI's ability to execute on its ambitious hardware strategy and Broadcom's capacity to deliver the custom technology at scale.