Broadcom's Google Deal Extends AI Chip Revenue Through 2031

Jefferies analyst Blayne Curtis renewed his Buy rating and $550 price target on Broadcom (AVGO) on June 30. He pointed to the company's improving AI chip outlook and a scenario analysis that puts fiscal 2028 earnings per share between $30 and $40. At the midpoint of $35, that works out to a valuation multiple of about 10 times earnings, Curtis said.

The core of his thesis is the long-term partnership with Google for custom Tensor Processing Units. The agreement now runs through 2031, with guaranteed minimum revenue and potential upside exceeding $500 billion over its life, Curtis noted. That extension removes a key uncertainty around Broadcom's AI chip revenue base.

Beyond Google, Jefferies highlighted a broadening customer list for the company's application-specific integrated circuits (ASICs), the custom chips built for individual AI workloads. OpenAI is the latest example. The two companies unveiled Jalapeno, OpenAI's first custom AI accelerator chip designed for large language model inference. Curtis said the diversification away from a single buyer signals that Broadcom's custom-chip model is scaling.

AVGO stock page carries an Alpha Score of 57 out of 100 from AlphaScala, a Moderate label. The score reflects the Technology sector positioning and the market's mixed view on valuation versus growth potential.

The fresh endorsement comes as the broader AI chip trade faces questions about spending sustainability and competitive pressure from Nvidia. Broadcom's edge is its custom-chip approach, which locks hyperscalers into long-term contracts with recurring revenue. The trade-off: Broadcom's fortunes are tied to each partner's internal chip strategy and willingness to keep designing custom silicon. The Google extension through 2031 removes one source of doubt. The OpenAI deal adds a second major name. Whether the client list grows further will determine if the $30-$40 EPS scenario materializes.