Broadcom Soars As OpenAI Unveils 10-Gigawatt AI Partnership

OpenAI has signed a multi-year agreement with Broadcom to co-develop custom chips and networking equipment, aiming to deploy 10 gigawatts of AI data center capacity—a scale roughly equivalent to the power output of five Hoover Dams. The deal marks the arrival of a new era of ultra-large-scale AI infrastructure.

Under the agreement, OpenAI will design the hardware, while Broadcom will handle development and manufacturing. The two companies plan to begin deploying server racks in the second half of 2026, with full deployment expected by the end of 2029. Following the announcement, Broadcom’s stock jumped more than 12% in U.S. pre-market trading.

This marks another major deal for OpenAI this year. The company previously reached a $100 billion investment agreement with NVIDIA and signed a 6-gigawatt chip supply deal with AMD. These consecutive large-scale investments highlight the massive computational demand driving the AI industry’s rapid expansion.

OpenAI CEO Sam Altman said that by developing custom chips, the company can directly embed its model-building experience into hardware, thereby “unlocking new levels of capability and AI potential.” However, unlike the NVIDIA and AMD partnerships, this agreement does not involve any equity or investment components.

Ultra-Scale Deployment Redefines AI Infrastructure

The 10-gigawatt compute capacity represents an unprecedented scale of deployment. Its electricity consumption would equal the power needs of over 8 million U.S. households. According to Bloomberg, one gigawatt roughly equals the output of a standard nuclear power plant—underscoring how AI infrastructure is now scaling to industrial proportions.

Broadcom CEO Hock Tan hinted at the deal during last month’s earnings call. Charlie Kawwas, president of Broadcom’s Semiconductor Solutions Group, noted that achieving deployment at such a scale won’t happen overnight, adding that railroads took about a century to build and the internet took roughly 30 years—this won’t be completed in just five.

OpenAI co-founder and president Greg Brockman also admitted that even this monumental build-out is only a beginning, as compared to where the company needs to be; 10 gigawatts of computing power isn’t enough to achieve their AI vision.

Custom Chip Race Boosts Broadcom’s Rise

The partnership places OpenAI among the growing list of companies—alongside Google’s Alphabet and Amazon—developing custom AI chips to meet soaring demand and reduce reliance on NVIDIA’s expensive and supply-constrained processors.

Media reports earlier indicated that Broadcom had received a $10 billion custom AI chip order from an unnamed client in September, widely believed by analysts to be OpenAI. Since late 2022, Broadcom’s stock has surged nearly sixfold, making it one of the biggest beneficiaries of the generative AI boom.

The new system will rely entirely on Broadcom’s Ethernet and networking equipment, giving the company an edge over smaller competitors like Marvell Technology, while also challenging NVIDIA’s InfiniBand networking dominance. Broadcom’s stock is up 40% this year, outperforming the Philadelphia Semiconductor Index’s 29% gain.

AI Investment Frenzy Raises Bubble Concerns

OpenAI’s flurry of major agreements this year underscores its urgent need for computational power. In addition to the Broadcom partnership, NVIDIA announced plans last month to invest up to $100 billion in OpenAI’s new infrastructure, targeting at least 10 gigawatts of capacity. Just last week, OpenAI revealed a separate deal with AMD to deploy 6 gigawatts of processors over multiple years.

AI and cloud computing firms are announcing new megaprojects almost weekly, but the financing structures often remain unclear. These overlapping commitments have fueled concerns of an AI investment bubble.

OpenAI stated that its agreement with Broadcom does not involve equity or investment, unlike the agreements with NVIDIA and AMD. A company spokesperson declined to comment on how OpenAI plans to fund the chip production, but noted that the fundamental idea is that more computing power will enable the company to sell more services.

Currently valued at $500 billion, OpenAI remains the world’s most valuable startup, and its aggressive infrastructure expansion is reshaping the landscape of the global AI ecosystem.