Broadcom stock leapt roughly 13 % on the day after news broke of a new chip partnership with OpenAI, adding fresh momentum to the semiconductor rally driven by AI infrastructure demand.
This move complements recent high-profile deals between OpenAI and Nvidia as well as OpenAI and AMD, reinforcing the trend of AI firms seeking diversified hardware supply chains.
Under the agreement, OpenAI will design custom AI processors while Broadcom will take charge of development and deployment.
The deployment is slated to begin in the second half of 2026 and span through 2029.
Broadcom’s share price reaction reflects investor enthusiasm about the company’s elevated role in AI infrastructure as OpenAI shifts from off-the-shelf GPUs to bespoke silicon.
The deal calls for 10 gigawatts’ worth of AI chips, a scale comparable to powering more than 8 million U.S. homes, underscoring the size of compute that OpenAI will absorb internally.
Notably, the new chips will be integrated with Broadcom’s networking stack (Ethernet and related gear), giving it an edge over smaller rivals and directly challenging Nvidia’s networking solutions like InfiniBand.
This Broadcom tie-up joins the roster of recent OpenAI agreements: Nvidia is backing OpenAI’s data center systems with up to 10 GW capacity, while OpenAI’s AMD deal covers 6 GW and gives it equity warrants to acquire a stake.
The diversification away from exclusive reliance on Nvidia aims to reduce supply risks and negotiate better economics, while also increasing OpenAI’s self-reliance in compute infrastructure.
The companies declined to disclose financial terms of the deal, leaving market watchers to speculate on margin dynamics and capital allocation.
Some analysts caution that custom chip projects historically face delays or performance gaps versus leading GPU providers, noting that Microsoft and Meta have struggled with in-house chip efforts.
Broadcom’s 13 % surge highlights how crucial chip supply to AI platforms has become. By joining Nvidia and AMD in OpenAI’s hardware ecosystem, Broadcom cements its place among the new frontier players in the AI semiconductor arms race.
