Broadcom (NASDAQ: AVGO) The company’s shares are rising Thursday after the announcement of new contracts. The company’s stock was up 1.9% as of 11 a.m. ET, according to data from S&P Global Markets InsightsThe stock had risen as much as 4% earlier in the daily session, but pulled back in subsequent trading, in line with broader market moves.
Broadcom has won new contracts to supply application-specific integrated circuits (ASICs) for artificial intelligence (AI), according to a report published today by Benzinga (AI). The report cites the coverage of JP Morgan Analyst Harlan Sur says the semiconductor company has secured major contracts to supply chips to OpenAI – the company behind ChatGPT.
Broadcom racks up AI successes
Broadcom has been selected by OpenAI to supply first- and second-generation AI ASIC chips, according to Sur. The news follows reports and announcements that the semiconductor company is also supplying AI-focused ASICs to Alphabet, Meta-platformsand ByteDance, the company behind the popular social media app TikTok. It is noted that Broadcom has also secured a fifth, as yet unnamed, customer for AI ASIC chips.
What’s next for Broadcom stock?
Broadcom’s sale of AI ASIC chips to OpenAI and its new undisclosed partner will ramp up in 2026. The company’s new 2-nanometer and 3-nm platforms appear to be paying off, and improvements in transistor density, performance, and power consumption could help attract additional customers.
Broadcom shares are up about 51% year-to-date, driven by strong business performance and an encouraging outlook for AI. That performance has pushed the company’s forward price-to-earnings ratio above 35.
While the company’s valuation depends on growth, Broadcom benefits from strong competitive positioning in its AI chip segment and additional advantages created by its software business. With signs that the company is only in the early stages of benefiting from AI-related tailwinds, the stock continues to look like a worthwhile investment even after some big gains this year.
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