Why Broadcom Stock Is Winning Today

Broadcom (AVGO -0.57%) stock rises Thursday on new contract news. The company’s share price was up 1.9% at 11 a.m. ET, according to data from S&P Global Market Intelligence. The stock rose as much as 4 percent earlier in the daily session, but retreated in later trade in tandem with moves for the broader market.

According to a report published today by Benzinga, Broadcom has won new contracts to provide application-specific integrated circuits (ASICs) for artificial intelligence (AI). The report cites coverage from JP Morgan analyst Harlan Sur and says the semiconductor company has landed major contracts to supply chips to OpenAI — the company behind ChatGPT.

Broadcom is racking up AI gains

According to Sur, Broadcom has been selected by OpenAI to provide first- and second-generation AI ASIC chips. The news comes on the heels of reports and announcements that the semiconductor company also supplies ASICs designed for artificial intelligence. Alphabet, Meta platformsand ByteDance — the company behind the popular social media app TikTok. Sur notes that Broadcom has also secured a fifth, as-yet-unnamed customer for ASIC AI chips.

What’s Next for Broadcom Stock?

Broadcom’s sale of ASIC AI chips to OpenAI and its new undisclosed partner will increase in 2026. The company’s new 2nm and 3nm platforms look set to deliver gains, and improvements in transistor density, performance and power consumption could help attract of additional customers.

Thanks to strong business performance and an encouraging outlook in artificial intelligence, Broadcom shares are up about 51% year to date. The performance pushed the company’s forward price-to-earnings ratio above 35.

AVGO PE Ratio data (before) by YCharts

While the company trades at a growth-dependent valuation, Broadcom has a strong competitive position in its corner of the AI ​​chip market and additional advantages created by its software businesses. With signs that the company is still in the early stages of benefiting from AI-related tailwinds, the stock continues to look like a worthwhile investment, even after some big gains this year.