The Broadcom stock price surged on Monday after the company announced a major strategic partnership with OpenAI to co-develop and deploy up to 10 gigawatts of custom artificial intelligence accelerators. As the stock market today opened for trading, the AVGO stock price jumped more than 7%, reflecting strong investor confidence in the deal.
However, in a surprising clarification, a Broadcom executive confirmed that OpenAI is not the mystery $10 billion customer the company announced during its September earnings call.
Details of the OpenAI and Broadcom partnership
The collaboration is a significant move for both companies, positioning them to build a massive amount of custom AI infrastructure.
- Custom hardware: OpenAI will design the accelerators and systems, which will then be developed and deployed with Broadcom. This allows OpenAI to embed what it has learned from developing its AI models directly into the hardware.
- Scale of deployment: The deal covers up to 10 gigawatts of custom AI chips and systems, a massive amount of power equivalent to the electricity consumption of a large city.
- Timeline: The deployment of the new systems is expected to begin in the second half of 2026.
“Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential and deliver real benefits for people and businesses,” said OpenAI CEO Sam Altman in a statement.
Clarifying the $10 billion mystery customer
The announcement put to rest weeks of speculation that OpenAI was the large, unnamed customer that Broadcom CEO Hock Tan mentioned in September. However, Charlie Kawwas, president of Broadcom’s semiconductor solutions group, stated that this was not the case.
“I would love to take a $10 billion [purchase order] from my good friend Greg [Brockman]. He has not given me that PO yet.”
This clarification indicates that Broadcom has yet another major AI customer in its pipeline, a positive sign for the future of AVGO stock.
OpenAI’s infrastructure blitz continues
This partnership is the latest in a series of massive infrastructure deals for OpenAI as it scales up its computing capacity. The company has recently signed multi-billion dollar agreements with both Nvidia and AMD.
The deals have raised some concerns about a potential “circular AI trade,” where chipmakers invest in AI companies, which then use that capital to buy chips from the investors. This has fueled discussions about a possible AI bubble, though many, like Amazon founder Jeff Bezos, believe that some of these investments will ultimately pay off.
The significant investment in custom silicon also shows a broader industry trend where major tech companies like Google, Amazon, and Microsoft are developing their own chips to reduce their reliance on a single hardware provider. While OpenAI will continue to use hardware from partners like Nvidia and AMD, this move gives it a larger role in designing the specific hardware needed to power its services like ChatGPT.
