Broadcom jumped nearly 4% in trading Wednesday after the chipmaker announced a deal with Meta to design the hyperscaler’s custom artificial intelligence accelerators. Analysts on Wall Street in their first take broadly saw the announcement as a positive, but disagreed whether it materially changed the outlook for Broadcom shares. The partnership will lead to an initial deployment of 1 gigawatt of power, with it expected to scale to multiple gigawatts through 2029. As part of the expanded partnership between the two companies, Broadcom CEO Hock Tan announced he won’t run for reelection for a seat on Meta’s board, which he joined in 2024. It comes on the heels of Broadcom announcing last week expanded deals with both Google and Anthropic. “Strategically, we see this as further evidence of AVGO’s leading position in the AI/XPU/Networking sectors, and while not overtly announced as an [long-term agreement] like the recent collaboration with Google/Anthropic, we view the multi-generational aspect of this press release as a positive,” wrote Deutsche Bank analyst Ross Seymore in a Tuesday note. AVGO YTD mountain AVGO year-to-date chart. Wolfe Research analyst Chris Caso said Tan’s decision to step down from Meta’s board is an important development, and he believes it implies the duration of the partnership between the two companies may be longer than explicitly stated. But Caso also thinks the information delivered in the announcement wasn’t new. “On the most recent earnings call, AVGO noted an expectation to ship META multiple GW in FY27 and beyond,” he wrote in a Wednesday note. “Therefore, this disclosure doesn’t appear to be materially different from what the company discussed on the earnings call.” Bernstein analyst Stacy Rasgon made a similar point, with the caveat that the 2029 detail did appear to be a new disclosure. Harlan Sur, a JPMorgan analyst, wrote in a Wednesday note that this deal and others show Broadcom stands to benefit as hyperscalers look more to develop custom chips. Goldman Sachs analyst James Schneider agreed, naming Broadcom as home to the “industry-leading” XPU platform. “This announcement further demonstrates Broadcom’s increasing traction with its XPU platform and networking solutions across major U.S. hyperscalers, and provides a broader and more diverse customer base with high exposure for Broadcom to both enterprise (through Google and Anthropic), and consumer (through Google and Meta) AI,” Schneider wrote.
