Broadcom is starting to look 'eerily reminiscent' of Nvidia. Both stocks are feeling the impact.

By Britney Nguyen

Broadcom said it added a fourth customer for its custom chips. Some analysts now think the company's AI revenue will double next year.

Broadcom's shares were up 11% early Friday.

Broadcom Inc. has added a new customer for its custom chips, and that has analysts feeling even more optimistic about the company's artificial-intelligence growth trajectory for next year.

On the chip manufacturer's (AVGO) earnings call, Chief Executive Hock Tan said that, in addition to three major customers ramping production of custom AI chips, a fourth customer has signed on. That business is expected to add $10 billion in revenue and start shipping in the second half of the 2026 fiscal year.

The $10 billion delivery "represents an unusually fast progression from prospect to customer to revenue," Rosenblatt analysts said in a Friday note. Broadcom has three other prospective customers, and the Rosenblatt team thinks Broadcom's success with this latest one bodes well for its opportunity to turn those others into revenue-generating clients.

'Apparently the AI lightning can indeed strike twice.'Bernstein analysts

With four customers expected to scale custom AI chip deployments in the next 12 months, and Broadcom's "stark language" describing its AI revenue opportunity in the next fiscal year, analysts at TD Cowen said in a Thursday note that they expect the company's AI chip revenue to grow 100% next year. Broadcom's previous projection of 60% growth in AI revenue in 2026 had already impressed investors.

Broadcom's stock was up 10% on Friday morning, putting the company on pace to cross the $1.5 trillion and $1.6 trillion market-capitalization marks for the first time ever, according to Dow Jones Market Data. It would be the eighth U.S. company to reach the $1.5 trillion milestone, according to the Dow Jones data.

Meanwhile, shares of Nvidia Corp. (NVDA) are down more than 3%, and shares of Advanced Micro Devices Inc. (AMD) are off more than 6%, with investors seemingly worried about the momentum for Broadcom's application-specific integrated circuits, a rival to graphics processing units.

See more: Broadcom gives Wall Street plenty of reason to cheer, and its stock moves higher

Melius Research analysts led by Ben Reitzes said in a Friday note that the previous estimate for $30 billion in AI chip revenue for fiscal 2026 should now exceed $40 billion after the addition of a fourth Broadcom customer. The analysts raised their AI revenue estimate to reflect the potential for 108% revenue growth in 2026.

Despite Tan's expectation for revenue from the fourth customer to accelerate in 2027, since it's currently in the beginning stages, Melius did not raise its estimates there much "in an effort to be conservative."

But at the point that Tan projects Broadcom's fiscal 2027 to accelerate, "the numbers start to get staggeringly large, and eerily reminiscent of the AI ramp observed at their primary [graphics processing unit] competitor over the last few years," Bernstein analysts led by Stacy Rasgon said in a Friday note, in a reference to Nvidia. "Apparently the AI lightning can indeed strike twice."

Despite missing Wall Street's expectations for its data-center revenue in its latest earnings report, Nvidia reported 56% year-over-year growth in the segment. Earlier in its AI boom, however, the company was seeing triple-digit growth in that area.

Broadcom did not disclose the name of its fourth customer, but the Financial Times reported on Thursday that AI startup OpenAI is preparing to produce its own AI chip next year in an effort to reduce reliance on Nvidia. The chip was reportedly co-designed with Broadcom and is set to ship next year.

With Broadcom set to gain share in the market for AI chips, "the commentary backs the incredible indications that the elite AI companies are getting about [customers' spending intentions] through 2030," Melius analysts said.

The Melius team said it recommends buying winners, which it named as Broadcom, Nvidia and Arista Networks Inc. (ANET). The team also noted that, while there may be investor concerns that Broadcom's win with OpenAI will come "at the expense of Nvidia and AMD," current AI spending plans "seem so big [among] so many [companies], hitting that panic button seems premature."

Tan announced on the earnings call that he will remain as Broadcom CEO until at least 2030, and the Bernstein team said this could suggest Tan "sees something worth sticking around for."

-Britney Nguyen

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09-05-25 1136ET