Pedro Goncalves writes:
Broadcom shares rose almost 2% ahead of the US opening bell, extending momentum after an 11% surge in the previous session, as investors bet on strengthening demand for the company’s AI microchips and processors.
The stock has been lifted by optimism surrounding Alphabet’s new Gemini 3 AI model. Broadcom is a key supplier of AI chips to the Google parent company, and expectations are building that the search group will increase its processor purchases as it accelerates Gemini 3 adoption.
Broadcom’s custom AI chips have become increasingly important to Alphabet in the rollout of Gemini 3, which has been trained on tensor processing units (TPUs). Analysts say Alphabet’s years-long investment in custom chip development through Broadcom and other partners is now yielding strategic benefits and providing a competitive edge.
Market attention is sharpening around Broadcom’s role as a core supplier for Alphabet’s AI infrastructure. The TPU partnership represents a key revenue stream for Broadcom as Google Cloud expands its AI capabilities.
In a note to clients, Melius Research wrote of Alphabet’s TPUs: “Outside of the Nvidia (NVDA) GPU [graphics processing unit] for AI workloads, the TPU is the most proven AI chip out there – and now it has the most tangible momentum.”