Broadcom (NASDAQ: AVGO) stock experienced a significant rebound during the extended trading session following April 6, surging 3.58% from $314.43 to $325.70. This upswing comes in the wake of Broadcom’s announcement of a multi-year agreement with Google (NASDAQ: GOOGL) and the artificial intelligence firm Anthropic, marking a pivotal moment for the semiconductor and infrastructure company.
Under the terms of the deal, which extends through 2031, Broadcom will develop and provide next-generation custom AI chips for Google, the world’s largest search engine. Concurrently, the company will supply Anthropic with approximately 3.5 gigawatts of computing power, leveraging Google’s capacity to support its operations. While the financial details of the agreement remain undisclosed, the press releases indicate that the capacity for Anthropic is contingent on the firm’s continued commercial success.
Recently, Anthropic reported that its annualized revenue had soared to over $30 billion, a remarkable increase from just $9 billion at the beginning of 2026. Despite such impressive figures, industry experts, including Ed Zitron, advise caution regarding the revenue claims of private AI companies, pointing to a lack of independent verification and discrepancies when compared to known figures from public companies.
This landmark agreement is seen as a potential catalyst for Broadcom to recover from a 9.55% decline earlier in 2026 and possibly set the stage for its stock to reach the $400 levels seen in late 2025. Technical analysis from TradingView, dated April 7, indicates a bullish sentiment, with moving averages positioning AVGO shares as a “Buy.” However, one-month oscillators are signaling a “Sell,” highlighting a mixed market perspective.
Wall Street analysts project a nearly 50% upside for Broadcom, with average price targets suggesting the stock could exceed $470. Even the lowest 12-month forecast of $360 is above the company’s recent closing price. This optimistic outlook is bolstered by the “Strong Buy” ratings that have emerged from multiple notes issued in the past three months, predominantly before the announcement of the agreement with Google and Anthropic.
Why investors should remain cautious despite AVGO stock tailwinds
Despite these favorable developments, the “Buy” recommendation for Broadcom hinges on the sustained growth of the AI sector. While industry leaders and analysts generally express confidence in ongoing advancements in AI technology, several uncertainties persist. One pressing issue is the profitability of companies in the AI sector. Although forecasts predict substantial profits in the mid to long term, the immediate outlook for 2026 remains uncertain.
Moreover, recent announcements of delays or cancellations in various data center projects raise questions about the industry’s capacity to deliver essential infrastructure on time, even if demand materializes as anticipated. In this context, while Broadcom’s partnership with Google and Anthropic may position it favorably in the evolving AI landscape, the broader market dynamics warrant a cautious approach for investors.
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