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SAN FRANCISCO/PALO ALTO - OpenAI and Broadcom Inc. (NASDAQ:AVGO), a semiconductor giant with a market capitalization of $1.53 trillion and impressive gross profit margins of 77%, announced today a multi-year collaboration to develop and deploy 10 gigawatts of custom AI accelerators, with deployments scheduled to begin in the second half of 2026 and complete by the end of 2029. InvestingPro analysis shows Broadcom maintains a "GREAT" financial health score, positioning it well for this significant investment.
Under the partnership, OpenAI will design the accelerators and systems, which will be developed and deployed in collaboration with Broadcom. The companies have signed a term sheet for the project, building on their existing agreements for co-development and supply of AI accelerators.
The racks will utilize Broadcom's Ethernet and other connectivity solutions to scale AI infrastructure. Deployments will span across OpenAI's facilities and partner data centers to address growing demand for AI computing resources.
"Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI's potential," said Sam Altman, co-founder and CEO of OpenAI, according to the press release.
Hock Tan, President and CEO of Broadcom, described the collaboration as "a pivotal moment in the pursuit of artificial general intelligence."
The custom accelerators aim to incorporate OpenAI's experience from developing frontier models directly into hardware design. This approach could potentially enhance performance for AI workloads compared to general-purpose computing solutions.
OpenAI currently serves over 800 million weekly active users across its products and services, according to the company statement.
The announcement reinforces Broadcom's strategic positioning in AI infrastructure, particularly in custom accelerators and Ethernet networking for AI data centers. With revenue growth of 28% over the last twelve months, Broadcom continues to strengthen its position as a prominent player in the Semiconductors industry. According to InvestingPro, which offers detailed analysis through its comprehensive Pro Research Report (available for 1,400+ US stocks), the company currently appears to be trading above its Fair Value.
This partnership represents one of the largest publicly announced AI hardware collaborations to date, highlighting the significant capital investments being directed toward expanding AI computing capacity. Investors seeking deeper insights into Broadcom's valuation and growth prospects can access over 20 additional exclusive ProTips and detailed financial metrics through InvestingPro's comprehensive analysis platform.
In other recent news, several analysts have provided updates on Broadcom, highlighting the company's strong position in the AI sector. Aletheia Capital initiated coverage on Broadcom with a Buy rating and set a price target of $400, anticipating that the company's AI revenue will significantly increase in the coming years. Bernstein SocGen Group reiterated an Outperform rating, also with a $400 price target, citing robust demand in the compute sector and confidence in Broadcom's growth trajectory. KeyBanc maintained its Overweight rating with a $420 price target, expecting higher earnings results for the October quarter and strong guidance for January, driven by AI demand.
Mizuho also reiterated an Outperform rating with a $410 price target, noting expected revenue from AI-related products and addressing investor concerns about Broadcom's customer relationships. Meanwhile, Cisco announced new chip technology to compete with Broadcom in AI networking, introducing the Silicon One P200 chip and 8223 routing systems designed for faster data transfers in AI data centers. These developments underscore the competitive landscape in the AI sector, with Broadcom maintaining a strong position amid increasing demand and competition.
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