Broadcom Shares Soar On 10-Gigawatt Chip Deal With OpenAI 

Shares of Broadcom surged early in the U.S. cash session after the chip designer signed a multiyear agreement with Sam Altman’s OpenAI to co-develop 10 gigawatts of custom AI accelerators and systems, marking a strategic move toward vertically integrated AI infrastructure such as data centers. This follows recent deals between the ChatGPT creator and both Nvidia and Advanced Micro Devices, and comes less than two weeks after we described the stunning math behind AI vendor financing, calling it an epic “circle jerk.“

“Broadcom’s collaboration with OpenAI signifies a pivotal moment in the pursuit of artificial general intelligence,” Broadcom CEO Hock Tan stated in a press release, adding, “OpenAI has been in the forefront of the AI revolution since the ChatGPT moment, and we are thrilled to co-develop and deploy 10 gigawatts of next- generation accelerators and network systems to pave the way for the future of AI.”

Here are the highlights of the Broadcom-OpenAI deal:

• Partnership Overview: OpenAI and Broadcom announced a major collaboration to co-develop 10 gigawatts of custom AI accelerators, marking a strategic move toward vertically integrated AI infrastructure.

• Custom Chip Design: OpenAI will design its own AI accelerators and system architecture, embedding insights from developing frontier models directly into hardware to boost performance and efficiency.

• Broadcom Role: Broadcom will develop and deploy the systems using its Ethernet, PCIe, and optical connectivity solutions, scaling racks designed to meet the global surge in AI computing demand across OpenAI’s facilities and partner data centers.

• Strategic Importance: The initiative allows OpenAI to reduce dependence on third-party chips (e.g., Nvidia) and tailor hardware to its unique model workloads, while Broadcom cements its leadership in AI networking and semiconductor solutions.

OpenAI CEO Sam Altman commented on the partnership, saying, “Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential and deliver real benefits for people and businesses. Developing our own accelerators adds to the broader ecosystem of partners all building the capacity required to push the frontier of AI to provide benefits to all humanity.”

In September, Nvidia announced plans to supply at least 10 gigawatts of its AI systems to power OpenAI’s next-generation infrastructure for training and deploying future models. As part of the agreement, Nvidia committed to invest up to $100 billion in OpenAI, with the funds disbursed incrementally as each gigawatt of capacity comes online.

Nvidia announced another partnership last week, this time with AMD, for six gigawatts’ worth of chips, starting with the Instinct MI450 series. Unlike the deal with Nvidia, OpenAI has a warrant to purchase 160 million shares of AMD’s stock that translates to just under 10% of AMD, based on the number of outstanding shares.

We made this circular scheme famous earlier this month:

• The Stunning Math Behind The AI Vendor Financing “Circle Jerk”

In markets, Broadcom shares jumped nearly 10%. Year to date, shares are up 48%. 

Like clockwork, yet another AI deal rolls out, blowing the AI bubble even further.

Hm.