Overview
The Apple Deal
On July 8, Apple announced an expanded multiyear agreement with Broadcom worth more than $30 billion, running through 2031. This is Apple’s largest commitment yet under its American Manufacturing Program, and it will produce more than 15 billion chips domestically. The deal centers on Broadcom’s wireless connectivity technology, including the FBAR filters that manage cellular, Wi-Fi, and Bluetooth signal traffic inside every iPhone, along with custom RF components. As part of the agreement, Broadcom will invest $1.5 billion to expand its manufacturing facility in Fort Collins, Colorado.
This is a connectivity and RF deal, not an AI chip deal, but it matters just as much. It locks in Apple as a long-term customer through the end of the decade, reduces Broadcom’s exposure to any single product cycle, and reinforces the depth of the relationship between the two companies right as Apple works to diversify its supply chain out of Asia. Shares of Broadcom jumped nearly 5% the day the deal was announced.
Sector Overview
AI infrastructure spending has dominated markets for the past two years, and most of the attention has gone to Nvidia. Broadcom has quietly built a different kind of moat. Instead of selling general-purpose GPUs, it designs custom AI accelerators (ASICs) for hyperscalers that want chips built specifically for their own workloads. Google’s TPU program runs through Broadcom, and the company has added new custom chip customers including Meta, OpenAI, and Anthropic, all of whom are expected to ramp volume over the coming quarters. Management has guided for AI revenue to approach $100 billion by fiscal 2027.
That combination, custom AI silicon on one side and dominant connectivity and networking hardware on the other, is what makes Broadcom different from a pure AI chip stock. It gets paid whether the AI buildout favors GPUs or custom silicon, and it gets paid every time Apple ships a phone.
Competitive Positioning
Broadcom sits alongside Nvidia and Marvell Technology in the AI infrastructure conversation, but it competes on a different axis. Nvidia sells the highest-performance general-purpose GPU. Broadcom wins by embedding itself directly into the roadmaps of the largest technology companies in the world, designing chips that are custom-fit to their infrastructure and nearly impossible to rip out once integrated. A $30 billion, six-year commitment from a customer like Apple is not common in this industry, and it speaks to how sticky these relationships are once Broadcom is inside the supply chain.
Why to Buy
Broadcom currently trades around $370 a share. Bank of America rates the stock a Buy with a $530 price target, raised from $450 after Broadcom’s most recent earnings beat, based on a 30x multiple of its 2027 earnings estimate. The broader analyst community agrees: the stock carries a Strong Buy consensus across roughly 48 analysts, with an average price target near $524, implying over 40% upside from current levels.
The bull case rests on three pillars. First, custom AI silicon demand from hyperscalers is still in its early innings, with new customers ramping and existing ones expanding. Second, the Apple relationship just got materially deeper and more durable through 2031. Third, Broadcom generates real free cash flow today, not just a promise of future profitability, which sets it apart from many other AI infrastructure names trading on narrative alone.
As with any of our picks, risks are worth naming. Broadcom’s top customers make up a meaningful share of revenue, so any slowdown in hyperscaler capex would hit hard. The stock also trades at a premium valuation, and any sign that AI infrastructure spending is decelerating could compress the multiple quickly. Investors should size the position accordingly.
With diversified AI exposure, a newly extended Apple partnership, and a Street that is broadly bullish, Broadcom is CFR’s Pick of the Week.
