What Happened?
Shares of fabless chip and software maker Broadcom (NASDAQ: AVGO) jumped 10.3% in the afternoon session after the company announced a strategic, multi-year collaboration with OpenAI to co-develop and deploy custom artificial intelligence (AI) accelerators.
These accelerators are specialized chips designed to handle the massive computing demands of advanced AI systems. Under the agreement, OpenAI designed the accelerators while Broadcom handled the development and manufacturing. The partnership aimed to deploy 10 gigawatts of these custom systems, with the rollout planned to start in the second half of 2026 and finish by the end of 2029. This landmark deal was expected to provide a substantial revenue stream for Broadcom, solidifying its key role in the growing AI infrastructure market. The collaboration was described by both companies as a critical step in building the infrastructure needed to advance AI capabilities.
Is now the time to buy Broadcom? Access our full analysis report here.
What Is The Market Telling Us
Broadcom’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Broadcom and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 4.4% on the news that President Donald Trump threatened to impose 'massive' new tariffs on Chinese goods, a response to Beijing's decision to tighten export controls on rare earth metals.
The escalating trade friction sent shockwaves through the market, with the PHLX Semiconductor Index (SOX) falling 4%. The move from China involves expanding restrictions on several rare earth elements, which are critical components for a wide range of high-tech products, including semiconductors. President Trump's retaliatory tariff threat intensified investor concerns about potential supply chain disruptions and increased costs for chipmakers. This geopolitical tension has created significant uncertainty, leading to a broad sell-off in the tech sector and pulling down major indexes like the S&P 500 and Nasdaq.
Broadcom is up 53.7% since the beginning of the year, and at $356.48 per share, it is trading close to its 52-week high of $369.57 from September 2025. Investors who bought $1,000 worth of Broadcom’s shares 5 years ago would now be looking at an investment worth $9,344.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
