The Rally
Broadcom shares rallied more than 10% Monday. Investors poured back into several high-flying tech companies tied to artificial intelligence.
Wall Street is taking notice of the chipmaker as a derivative play of Alphabet's growing AI dominance.
Monday puts Broadcom shares on pace for their best day since April 9. The stock is up 60% year to date. It's also the best performer in the Technology Select Sector SPDR fund, which tracks the S&P 500 tech sector.
The Google Connection
The move in Broadcom comes as investors continue pushing Alphabet shares higher. The stock rose more than 5% as the AI trade regained recently lost ground.
The two are related through ASICs. Google is a major customer of Broadcom's ASIC business. Broadcom helps design and manufacture Google's tensor processing units (TPUs).
These are Google's in-house specialized AI chips, used for the company's internal AI infrastructure. Google TPUs are considered a competitor to Nvidia's GPUs for AI workloads.
The Analyst Upgrades
Melius Research's Ben Reitzes reiterated his buy rating on Broadcom last month. He lifted his price target by $60 to $475, suggesting 39.6% potential upside.
"Google and its partner, Broadcom, have been at it together with this custom ASIC since 2016, now in its 7th generation," Reitzes wrote. "Outside of the Nvidia GPU for AI workloads, the TPU is the most proven ASIC out there."
"While good for Alphabet, it may turn out to be even better for Broadcom, who could have huge upside to its AI revenues," he continued. "The TPU is rapidly becoming a larger part of Alphabet's growth strategy."
The Inflection Point
Jefferies analyst Blayne Curtis named Broadcom a top pick earlier this month. He said ASICs are hitting an "inflection point" as Google's need for custom chips continues to grow.
"Google has long been the main ASIC customer for AVGO but those volumes should become much more meaningful in C26/27," Curtis wrote. "Google continues to see the amount of tokens they process per month rise and announced 1,300T in October up from 480T in April 2025."
Curtis lifted his price target by $65 to $480. That implies another 41% upside.
The Bull Case
Dan Ives, Wedbush Securities global head of technology research, is very bullish on both companies.
"Broadcom and Alphabet are the new AI plays the market is rediscovering the massive market for ASIC chips with Google leading the charge," he said. "This could be the most proven ASIC chip in the market and the AI Revolution is still early days."
The Alphabet Momentum
Alphabet shares are up 21% over the past month. That outperforms its "Magnificent Seven" peers and propels the broader market higher.
Investors have reacted positively to Google's latest AI model Gemini 3, its upcoming seventh-generation TPU called "Ironwood," its advancements in AI image generation with Nano Banana Pro and its new agent platform "Google Antigravity."
The Bottom Line
Broadcom surged 10% on growing enthusiasm for its Google ASIC partnership as analysts lifted price targets to $475-$480, citing Google's TPU token processing jumping from 480T to 1,300T per month as an inflection point for custom chip demand.