What Happened?
Shares of fabless chip and software maker Broadcom (NASDAQ:AVGO) jumped 5.2% in the afternoon session as investors positioned ahead of its fiscal Q2 FY2026 earnings report due after the close on June 3, amplified by independent AI catalysts as Anthropic confidentially filed to go public.
The day’s signals were unusually aligned. Alphabet announced plans to raise $80 billion, including a $10 billion investment from Berkshire Hathaway, earmarked for AI computing infrastructure. Broadcom designs Google’s TPU chips under a supply agreement running through 2031, making Alphabet’s capital deployment a direct forward revenue signal.
Also, Jensen Huang’s endorsement of Marvell (Broadcom’s closest rival in custom AI silicon) as the “next trillion-dollar company” at Computex validated the entire custom ASIC ecosystem, which Broadcom leads with approximately 60-70% market share.
Lastly, Anthropic’s confidential IPO filing matters directly for Broadcom: the company reportedly holds an agreement to supply Anthropic with 3.5 gigawatts of TPU capacity beginning in 2027.
Broadcom reported Q1 FY26 AI semiconductor revenue of $8.4 billion, up 106% year-over-year, on total revenue of $19.31 billion (+29% YoY). Management guided Q2 AI revenue to $10.7 billion, implying 140% year-over-year growth.
CEO Hock Tan has stated the company has “line of sight” to AI revenue exceeding $100 billion in 2027, backed by a $73 billion AI backlog and multi-year supply commitments from at least six hyperscaler customers including Google, Meta, OpenAI, and Anthropic. The VMware business, acquired for $69 billion in late 2023, contributed $6.8 billion in Q1 revenue at 78% margins, providing the steady, high-margin cash engine that is quietly funding Broadcom’s AI expansion.
After the initial pop, the shares cooled down to $478.76, up 4.1% from the previous close.
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What Is The Market Telling Us
Broadcom’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 4.3% on the news that it received a flurry of bullish analyst ratings, with several firms significantly raising their price targets on optimism surrounding its role in the Artificial Intelligence (AI) boom.
