Broadcom Posts Exceptional AI Chip Growth, Unveils Custom Chip With OpenAI

Broadcom reported a 143% year-over-year increase in Q2 AI chip growth, with revenue reaching $10.8 billion. The company unveiled a custom AI inference chip, Jalapeño, in partnership with OpenAI and projects over 200% AI revenue growth this quarter. Despite recent stock decline, analysts view this as a buyable dip due to a potential $200 billion revenue opportunity and undervaluation.

Broadcom (AVGO) posted exceptional Q2 AI chip growth, with AI revenue reaching $10.8 billion, a 143% year-over-year increase . Alongside the print, the company unveiled Jalapeno, a custom AI inference chip developed in partnership with OpenAI to push inference workloads toward the edge, and guided to over 200% AI revenue growth in the current quarter .

The scale of the OpenAI relationship is what has analysts recalculating Broadcom's addressable market: one analysis frames the partnership as a potential $200 billion revenue opportunity , positioning Broadcom as a leading merchant supplier of custom AI silicon and networking alongside its established franchise. Custom-silicon design wins with hyperscalers are increasingly viewed as the durable counterweight to a market otherwise dominated by off-the-shelf accelerators.

Despite the strong quarter, AVGO shares trade roughly 24% off their high , a dislocation several analysts characterized as a buyable dip. The near-term watch items are whether the design wins convert backlog into recognized revenue on schedule, and how the OpenAI custom-chip effort scales against Nvidia's (NVDA) dominance in AI accelerators.

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