Earlier this week, Meta Platforms (META) announced an expansion of its multi-year, multi-generation partnership with Broadcom (AVGO) to jointly develop custom MTIA AI accelerator chips and Ethernet networking solutions, providing foundational support for Meta’s rapidly growing AI data centers through at least 2029. The agreement is substantial in scale, including an initial commitment of over one gigawatt of custom computing capacity, underscoring Broadcom’s deep involvement in the AI infrastructure roadmap of major platforms.
Driven by an overall rebound in the semiconductor sector, Broadcom’s stock has continued its strong performance, rising significantly since April and gradually approaching record highs. On Thursday, Broadcom shares rose 0.44% to $398.47, marking the eighth consecutive trading day of gains and the longest winning streak since December 2023. The stock has already accumulated a 28% gain in April. If the upward momentum continues, this month will become the third-strongest performance month for the company since its listing in 2009. The stock price is now just a step away from the all-time closing high of $412.97 set in December of last year.
Broadcom’s stock strength is partly attributable to the overall rebound in the semiconductor sector. After a market sell-off following the US-Israeli attack on Iran, sentiment has been repairing, and capital is flowing back into chip stocks. The VanEck Semiconductor ETF, which tracks industry performance, has risen approximately 19% so far this month. Institutions are generally optimistic about the industry’s prospects, with sustained expansion in demand for artificial intelligence and data centers serving as the core growth driver. Bank of America recently projected that the non-memory semiconductor market will grow at an annual rate of approximately 25% in 2026, up from its previous forecast of 22%.
Beyond industry factors, Broadcom’s own business progress has also become a significant support for the stock’s rise. The company recently reached expanded cooperation agreements with Google, Meta Platforms, and AI startup Anthropic, further solidifying its position in the AI computing power sector. As a result, UBS has raised its medium-term performance expectations for Broadcom, projecting the company will ship approximately 7 million TPU accelerators by 2027, up from its previous forecast of 6 million units, while maintaining a “Buy” rating with a price target of $475. Among 54 analysts, 51 have given a “Buy” or equivalent rating.
Holding Broadcom stock requires confidence that its core AI model based on custom XPUs and Ethernet can help hyperscale data centers withstand cyclical fluctuations and customer concentration risks. Meta’s expanded cooperation agreement has strengthened Broadcom’s AI order backlog advantage in the short term, but it has also intensified a key risk: a small number of customers contribute the vast majority of AI revenue. If any one of them changes direction, Broadcom would face significantly greater risk. The collaboration agreement between Meta and MTIA extends through 2029 and is directly tied to Broadcom’s strategy of working with a few hyperscale data center operators to build multi-year AI infrastructure. Furthermore, Broadcom’s long-term TPU and networking agreements with Google and Anthropic indicate that its AI chips and Ethernet technology are increasingly becoming the core of large-scale gigawatt data center projects that underpin a record $110 billion order backlog. Broadcom forecasts that by 2028, revenue will reach $119.6 billion, with earnings of $50.8 billion, implying an annual revenue growth rate of 25.9% and a $32 billion increase in earnings compared to the current $18.8 billion. Previously, the most optimistic analysts predicted Broadcom’s earnings could reach approximately $137.6 billion by 2029. The news from Meta both reinforces the bullish outlook and highlights the extent to which growth depends on a small number of hyperscale customers.
