Broadcom Stock: How Long-Term Google Agreement and Rising AI Demand Position It for 2030 Growth

TradingKey - On Monday, Broadcom Inc. (AVGO) announced that it has entered into an Extended Supply Agreement with Alphabet Inc. (GOOGL) for the design and supply of next-generation Tensor Processing Units (TPUs) and Networking components through 2031. 

The formal Long Term Agreement provides that Broadcom will be the primary design partner for the custom TPUs used in future generations of Google's custom TMUs and other products, enabling Google to leverage Broadcom's engineering expertise to develop new, cutting-edge custom silicon. 

The Long Term Supply Agreement also establishes a parallel Supply Assurance Agreement for networking equipment and other components for Google's next generation of AI computing racks, which are essential to ensuring the continued availability of large clusters of computer chips for training and running systems like Gemini. 

Broadcom's stock reacted positively to the announcement of the major supply agreements with Alphabet, as they represent a deepening relationship between the two companies with respect to co-developing custom silicon and networking infrastructure over an extended period of time.

Scale and Hyperscaler Demand: Anthropic’s 3.5 GW Commitment

Anthropic PBC will be able to utilize approximately 3.5 gigawatts of next-generation TPU-based compute via Broadcom, starting in 2027, as the collaboration grows and goes beyond first-party hardware. 

The increased volume of power and silicon demonstrates the rapidly expanding scale of AI infrastructure while organizations continue to deploy increasingly large models.

 The 2031 outlook is likely viewed by investors as an indication for predictable and higher margin revenue for AVGO's custom ASIC business, and long-term access to a leading AI developer provides even more visibility on the demand for this product. 

Bank of America analyst Vivek Arya believes that these new deals give AVGO additional visibility as a longer-term design partner for the TPU and help to eliminate previous overhang on the stock from the potential of Google to insource or distribute to MediaTek. 

In addition, custom ASIC programs generally provide stronger and longer-term visibility to a contractor's deployment plans, and he believes Broadcom is appropriately positioned to gain accelerator market share in CY26 and CY27 as a result of these new expansions with Google and Anthropic.

AI TAM and ASIC Share Could Power Broadcom’s Growth

Understanding why the demand is expected to remain strong can be explained by the big‑picture spending plans of those companies. 

According to IDC, AI will contribute $22.3 trillion to the global economy by 2030, generating approximately $4.90 for every $1 spent on AI services/solutions. 

Additionally, Nvidia projects AI data center capital expenditures will reach between $3 and $4 trillion by 2030. 

Per a McKinsey report, roughly 60% of AI infrastructure spending will go towards chips and other computing hardware; Broadcom has strengths in this area. ASICs are taking a share of that hardware. 

TrendForce estimates ASICs will grow from 24.3% of the AI chip market in 2023 to nearly 28% by 2026. If Advanced Micro Devices (AMD) has it right, by 2030, data center AI accelerators will represent a $1 trillion total addressable market. 

Thus, if ASICs represent 30% of that, or $300 billion, then Broadcom would achieve approximately $180 billion in AI revenue in 2030, assuming they maintain 60% market share. Broadcom’s stock would be well-positioned for significant gains over the long term.

Broadcom’s AI Revenue Trajectory from 2025 to 2027

The company's future seems bright based on the most recent performance data available. The first quarter of fiscal yr 2026 ended on the 4th of March (the last day of February) at Broadcom, and there was strong evidence that AI revenues were growing quickly, with $20B of AI chips sold during fiscal yr 2025, and now expecting more than $100B of AI chip sales alone in fiscal yr 2027; a nearly five times increase in just 24 months. 

Broadcom has the confidence of being a dominant player in this large and rapidly growing ASIC market, holding a 60% share, with continued momentum in providing networking silicon for AI Data Centers, and the ever-increasing need for compute power by hyperscalers and major AI labs around the world. 

With the continued expansion of the share of ASICs vs others in the Accelerator mix and multi-year contracts with both Google and Anthropic, there is good visibility for continued growth throughout the next several years.

Projecting Broadcom Stock into 2030

Analysts expect the sales base to significantly grow in the next couple of years and project that total revenue will be $155 billion next year. 

The majority of revenue, approximately $100 billion, will come from Broadcom's AI chip revenue, while non-AI semiconductors and Broadcom's Infrastructure Software business will generate the remaining revenue. 

If we keep Broadcom's non-AI businesses the same as they were at the end of Fiscal 2027 through 2030 and add $180 billion of revenue from AI chips, Broadcom would be on pace to have about $235 billion of total revenue within 5 years. This would be an approximate increase of 273% from Broadcom's FY 2025 revenue of approximately $64 billion. 

If we assume the average sales multiple of the U.S. technology sector is 7.8x, then Broadcom's $235 billion of sales will equate to a market capitalization of approximately $1.8 trillion in 2030. This would represent a market capitalization of $384 billion today, or an increase of 20% from current market values. 

Today, Broadcom trades at a premium multiple of approximately 23x sales; therefore, there is potential for the stock to deliver more upside if execution is strong and the stock continues to trade in the same multiple range. Furthermore, the above scenario analysis does not factor in any revenue growth from the non-AI businesses, which provides additional upside potential if those markets expand.

Where Software Fits into the Broadcom Story

Software continues to be an important part of the picture and could play a subtle role as a growth engine. 

In the last quarter, Broadcom received 35% of its total revenues from infrastructure software. Infrastructure software revenue is projected to grow 9% from year to year to $7.2 billion for the current quarter. During the last quarter, the company secured $9.2 billion in infrastructure software contracts, which support visibility over several years. 

According to third-party projections, the infrastructure software market is set to grow to approximately $210 billion by 2030, compared to $161 billion by 2024. Even assuming no contributions to net growth for software by 2030, Broadcom provides diversification and cash flows. Any growth in software will only increase revenues to support the price of Broadcom shares.