This article first appeared on GuruFocus.
Broadcom (NASDAQ:AVGO) is looking more and more like one of the quieter winners of the AI boom, as demand builds around networking gear and custom chips tied to Google’s latest processors, Susquehanna said.
Broadcom has worked with Google on its in-house AI chips for nearly a decade, and the newest version, Ironwood or TPUv7, is coming out of the gate stronger than expected. Susquehanna says Google recently brought in Anthropic as a major customer for as many as 1 million TPUs, with Meta also showing up as another big buyer.
That traction is starting to show in orders. CEO Hock Tan said one XPU prospect has already turned into a real customer, which Susquehanna believes is Anthropic, and could translate into more than $10 billion in AI rack demand in the back half of FY26.
Broadcom is also supplying infrastructure to OpenAI, including up to 10 GW of AI racks, which puts it squarely in the middle of the industry’s fastest-growing spend. Broadcom is selling the plumbing behind AI, not just the chips, and that work pays extremely well. Susquehanna lifted its price target to $450 from $400 and kept a Positive rating.
