Broadcom Lands $350 Billion AI Chip Deal with OpenAI--Shares Explode

OpenAI has taken another swing at reshaping the AI hardware landscape, signing a multiyear pact with Broadcom AVGO to build custom chips and networking gear that could redefine its computing backbone. The partnership aims to add 10 gigawatts of AI data center capacity starting in the second half of 2026, with full rollout expected by 2029. Broadcom shares surged as much as 11% following the announcement, reflecting growing investor conviction that the chipmaker is fast becoming one of the most critical beneficiaries of the AI buildout.

Under the agreement, OpenAI will design the semiconductors while Broadcom handles development and production a collaboration that could let OpenAI embed its deep learning know-how directly into hardware. CEO Sam Altman said the two companies have been working together for 18 months, refining everything from transistor design to how ChatGPT executes a query. The goal, he explained, is simple but transformative: optimize every layer of the stack to deliver faster, cheaper, and more efficient AI models. Broadcom CEO Hock Tan framed the deal as a move toward self-reliance, noting that if you do your own chips, you control your destiny, signaling OpenAI's desire to lessen its dependence on Nvidia's NVDA proprietary ecosystem.

The agreement adds yet another piece to OpenAI's rapid-fire infrastructure expansion coming on the heels of Nvidia's commitment to invest up to $100 billion in OpenAI's data centers and AMD's (AMD) separate deal to provide 6GW of processors. Unlike those pacts, this one involves no equity component, but it underscores how AI's supply chain is becoming an intricate web of mutual dependence and massive capital spending. Industry estimates put the cost of a single gigawatt of AI computing power at roughly $35 billion in chips alone. Even so, OpenAI President Greg Brockman called the 10GW plan a drop in the bucket compared to what's needed to reach the company's ultimate goal a push toward artificial general intelligence that could redefine the scale of the industry itself.