Why did Broadcom Shares Surge in Premarket Trading Today?

Broadcom shares surged 7% in premarket trading after announcing a $10 billion AI deal and upbeat revenue forecasts.

Broadcom (NASDAQ: AVGO) shares jumped 7% in premarket trading on Friday morning, driven by the semiconductor giant’s announcement of a massive new artificial intelligence deal and optimistic revenue forecasts. The chipmaker secured over $10 billion in AI infrastructure orders from a new customer, with CEO Hock Tan projecting “significantly improved” AI revenue growth for fiscal year 2026. Adding to investor confidence, Tan pledged to extend his tenure through 2030, signaling strong leadership continuity as the company capitalizes on the generative AI boom.

Broadcom Reports $10B AI Deal and Upbeat Forecast

Broadcom announced it has secured over $10 billion in AI infrastructure orders from a new customer, marking a significant milestone in the company’s custom silicon strategy. CEO Hock Tan forecasted “significantly improved” AI revenue growth in fiscal year 2026, with total projected ASIC revenue reaching $30 billion for that period. The timing and scale of this deal has fueled speculation that OpenAI is the unnamed customer, following reports that the ChatGPT maker is working with Broadcom to develop custom AI chips.

The semiconductor company has become a key player in the generative AI boom by designing custom semiconductors for cloud giants seeking alternatives to Nvidia’s GPUs. Broadcom recently received an upward revision to its fiscal 2026 CoWoS wafer allocation at TSMC, increasing from 120,000 to 150,000 wafers, representing year-over-year growth of 81%. This new partnership represents the company’s fourth ASIC customer, adding to its already strong pipeline of custom silicon wins.

Tan’s decision to extend his tenure through 2030 provided additional reassurance to investors betting on the company’s AI strategy. The CEO had earlier hinted at four new potential customers who were “deeply engaged” with the company to create their own custom chips, in addition to its three existing large clients. This latest deal appears to be the materialization of that pipeline, with analysts calling it a “turning point” for Broadcom’s AI revenue outlook.

Analyst Upgrades and Stock Performance Highlights for Broadcom

Multiple investment banks raised their price targets for Broadcom following the announcement, with Morgan Stanley increasing its target to $382 from $357 while maintaining an Overweight rating. HSBC reiterated a Buy rating with a $400 price target, noting that the latest guidance aligns with their existing Street-high estimate of $30.6 billion for fiscal 2026 ASIC revenue. Both BofA Securities and Barclays raised their price targets to $400, driven by growth in the company’s custom AI chip business.

Bernstein analysts led by Stacy Rasgon stated that “Broadcom narrative is going to take off once again,” while J.P. Morgan analysts called the new deal a “turning point” that will “materially increase” the company’s AI revenue outlook for fiscal 2026 and beyond.

The stock has delivered impressive performance with a 102% return over the past year and currently trades near its 52-week high of $317.35. Broadcom’s shares have gained nearly 32% year-to-date, following the company’s valuation crossing $1 trillion in December. The company reported strong Q3 2025 earnings with $1.69 EPS, beating forecasts of $1.66, and generated $16 billion in revenue, above the anticipated $15.82 billion.

AVGO Stock Gains in Premarket

As of Friday’s premarket trading at 5:29:46 AM EDT, Broadcom (AVGO) was trading at $332.10, representing a surge of $26.00 or 8.49% from the previous close of $306.10. The stock closed Thursday’s regular session at $306.10, up $3.71 or 1.23%. With a market capitalization of $1.44 trillion, Broadcom trades at a forward P/E ratio of 36.90, reflecting a premium valuation relative to the broader market.

The company maintains impressive financial metrics including a 31.59% profit margin and 77.2% gross profit margins, demonstrating strong operational efficiency. Broadcom generated $59.93 billion in trailing twelve-month revenue with $18.81 billion in net income available to common shareholders. The company’s strong cash generation is evident in its $22.08 billion in levered free cash flow, supporting its dividend yield of 0.77%.

The stock’s 52-week range spans from $134.90 to $317.35, with recent performance driven by AI semiconductor demand and the company’s strategic positioning in custom chip design for major technology companies.

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.

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Originally Posted on September 5, 2025 – Why did Broadcom Shares Surge in Premarket Trading Today?