Broadcom stock posted its best performance in seven months Monday. The 11.1% gain topped all S&P 500 stocks as investors piled into AI-related names.
The move connects directly to Alphabet’s recent momentum. Google’s parent company rose over 5% as its AI initiatives gained traction.
These two stocks share more than timing. Broadcom manufactures the custom chips powering Google’s AI infrastructure.
The partnership dates back to 2016. Google’s tensor processing units compete with Nvidia’s GPUs for AI computing tasks.
Melius Research lifted its Broadcom price target to $475 last month. That represents 39.6% upside from Friday’s close.
Analyst Ben Reitzes highlighted the TPU’s growing role in Alphabet’s strategy. “The decision to develop this product early is now starting to inflect to the upside,” he wrote.
Jefferies went further with a $480 target. Analyst Blayne Curtis pointed to Google’s exploding processing demands.
Token volume hit 1,300 trillion in October. That’s up from 480 trillion just six months earlier.
“Google continues to see the amount of tokens they process per month rise,” Curtis noted. He expects multimodal AI models to drive even more growth.
Wedbush’s Dan Ives called Broadcom and Alphabet “the new AI plays the market is rediscovering.” He owns both in his AI-focused fund.
The stock trades around $380 after gaining 60% year to date. Monday marked its strongest single session since April 9.
Broadcom supplies custom AI chips to four confirmed hyperscale customers. Meta joins Google on that list.
These partnerships require years of engineering collaboration. Once established, switching costs keep relationships stable.
The company also sells high-speed networking gear. Its Tomahawk Ultra switches connect up to 1,024 accelerators per rack.
As cloud providers build larger AI clusters, networking becomes critical infrastructure. Some deployments now exceed 100,000 GPUs.
The software division posted $6.8 billion in Q3 revenue. That’s up 17% from the prior year.
Broadcom is shifting VMware customers to subscription models. One-time license fees become predictable monthly payments.
This transition improves cash flow visibility. The money can fund AI research or return to shareholders.
Software revenue balances the cyclical chip business. If hardware demand softens, recurring income cushions the impact.
Alphabet launched its Gemini 3 AI model recently. The company also announced a seventh-generation TPU called “Ironwood.”
New products include Nano Banana Pro for image generation and Google Antigravity for AI agents. Token processing continues climbing as these services scale.
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