Broadcom AVGO Surges 9.41% as $10B AI Chip Order Boosts 2026 Revenue Outlook

Broadcom’s (AVGO) stock surged 9.41% on Thursday, marking a four-day winning streak with a cumulative gain of 12.61%. The share price reached its highest level since September 2025, hitting an intraday high with a 16.41% spike. This rally reflects strong investor confidence in the company’s strategic advancements and market positioning.

The recent $10 billion AI chip order from a fourth customer, speculated to be OpenAI, has been a key catalyst. This contract, involving custom XPUs, is expected to boost Broadcom’s AI revenue forecast for 2026. CEO Hock Tan highlighted the order’s significance during earnings calls, emphasizing its role in accelerating shipments and expanding the company’s AI footprint beyond existing clients like Google and Meta.

Broadcom’s AI division demonstrated explosive growth, with third-quarter revenue jumping 63% year-over-year to $5.2 billion. Analysts revised their 2026 AI revenue projections upward, citing the company’s ability to secure large-scale contracts and its focus on custom ASICs tailored to client needs. This momentum positions Broadcom as a formidable competitor to Nvidia, particularly as the latter faces challenges in data center revenue.

Technological innovation further underpins the stock’s performance. The company’s progress on a 2nm chip manufacturing process offers a competitive edge in energy efficiency and computational density. This advancement addresses critical needs in AI infrastructure, where power consumption and performance are paramount. Analysts note that such innovations strengthen Broadcom’s value proposition for clients requiring specialized hardware.

Broader market dynamics also contribute to the stock’s rise. The acquisition of VMware has driven software revenue growth, with the segment rising 43% year-over-year to $6.79 billion. This diversification reduces reliance on cyclical hardware markets and supports long-term stability. Additionally, Broadcom’s ability to challenge Nvidia’s dominance in AI compute and networking has attracted investor attention, with projected market share gains by 2027.

Strong earnings and revenue guidance further solidified investor optimism. Third-quarter results exceeded expectations, with total revenue of $15.95 billion surpassing Wall Street forecasts. The company raised its fourth-quarter outlook to $17.4 billion, reflecting sustained demand across hardware and software. CEO Hock Tan hinted at AI revenue growth exceeding prior estimates, signaling aggressive expansion plans for 2026.