Broadcom Gains 2% as Custom AI Chips Drive Growth, May 26

Broadcom AVGO stock rose 2% to $422.85 on May 26, driven by strength in custom silicon for artificial intelligence. The company announced a $125 million partnership with Meta, Applied Materials, and GlobalFoundries to build an AI chip research lab at UCLA. Broadcom’s custom silicon sales doubled to $8.4 billion in the first quarter, signaling strong demand from major tech customers.

Custom Silicon Sales Double as AI Demand Surges

Broadcom’s application-specific integrated circuits (ASICs) for customers doubled to $8.4 billion in Q1 2026. Alphabet is a leading customer, and the company recently extended its deal to design custom chips for Alphabet’s Tensor Processing Units through 2031. This growth reflects a shift in the AI market away from general-purpose graphics processors toward specialized chips tuned for specific workloads.

Meta Partnership Signals AI Infrastructure Commitment

Broadcom joined Meta, Applied Materials, and GlobalFoundries to launch a $125 million AI semiconductor research hub at UCLA. The collaboration aims to accelerate innovation in next-generation AI chip technology. Industry analysts view this partnership as evidence that custom silicon partnerships create massive opportunity for Broadcom as tech companies race to build proprietary AI infrastructure.

Stock Valuation Remains Elevated Despite Neutral Rating

Meyka rates Broadcom a B+ with a neutral recommendation. The stock trades at a price-to-earnings ratio of 80.6x, well above historical averages. Analysts consensus is a Buy rating, with 42 buy recommendations and 1 hold. The 12-month forecast of $343.27 sits below the current price, suggesting limited upside from current levels.

Broadcom Outpaces Nvidia in Custom Chip Race

While Nvidia has dominated AI infrastructure for years, Broadcom and peers like Marvell are gaining ground in custom silicon. Tech giants are increasingly building proprietary chips tailored to their AI models, reducing reliance on general-purpose GPUs. Broadcom’s year-to-date gain of 19.7% lags the broader semiconductor sector but outperforms the S&P 500.

Final Thoughts

Broadcom’s 2% gain reflects strength in custom AI chips, but the stock’s 80.6x P/E ratio and Meyka’s B+ neutral rating suggest limited room for further upside. With analyst consensus at Buy and a $343.27 target, the data points to sideways trading ahead.

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