AVGO stock jumps on OpenAI deal: what it means now

TL;DR:

Oct 13, 2025, OpenAI and Broadcom announced a custom AI chip pact.
AVGO rose roughly 9–10% intraday on the news.
Plan is to deploy up to 10 GW of AI accelerators, starting in 2H 2026.
Broadcom kept Q4 FY25 revenue guidance at about $17.4 billion.
Watch execution, supply chain, and VMware program changes this month.

OpenAI and Broadcom said on Monday, October 13, 2025, that they will co-develop and deploy up to 10 gigawatts of custom AI accelerators and network systems. The companies framed it as a multi-year plan to add compute capacity for OpenAI’s future models.

AVGO rallied on the headline. By mid-session, shares were up about 9 to 10 percent, putting the stock on pace for its best day since mid-September.

What the OpenAI deal includes

The collaboration targets racks of new accelerators tied together with Broadcom networking. The plan calls for initial deployment in the second half of 2026, with rollouts continuing into 2029. The companies did not disclose dollars, unit counts, or margins. Both positioned the effort as part of a broader shift to custom AI silicon.

For Broadcom, this reinforces two core strengths. First, its custom silicon practice. Second, its data-center networking stack, which sits in the path of AI training clusters. The time line matters. Investors should treat 2026 and 2027 as the period when revenue from this pact can begin to show up.

Why the market cares

Broadcom already guided Q4 FY2025 revenue to about $17.4 billion, with strong AI contributions, when it reported on September 4, 2025. Today’s news supports that narrative, even if near-term numbers do not change. Guidance came via Broadcom’s filing and press materials.

Two points drive sentiment:

AI pull-through. Custom accelerators can drive chip, optics, and switching demand inside the same rack. That can help average selling prices and stickiness with a single buyer.
Proof of trust. A named partnership with a top AI buyer adds credibility to Broadcom’s roadmap. It also puts the firm in the same conversation as other custom chip providers.

What this means for AVGO in 2025–2026

Near term, expect the stock to trade with AI capex headlines. There is no change to fiscal Q4 guidance today. The focus stays on margins and free cash flow as Broadcom closes the year.

From 2026 on, investors will look for shipment milestones. The companies said deployment starts in the second half of 2026, then scales. That creates a path for multi-year revenue, but the slope depends on design wins, yields, and supply availability.

Do not ignore VMware program changes

Broadcom is also reshaping VMware’s partner ecosystem. A transition period runs until October 31, 2025 for non-invited partners. After that, they can service only existing commitments for the rest of the term. This can affect channel inventory, renewals, and multi-cloud choices for enterprise customers in Q4 and early 2026.

VMware service portals also shifted under Broadcom’s umbrella in early October. Customers should check access changes and plan for support paths. These steps are separate from today’s AI news, but they matter for software mix and services revenue.

Key numbers and dates

Today, Oct 13, 2025: OpenAI–Broadcom AI accelerator pact. Stock up roughly 9–10 percent intraday.
Sep 4, 2025: Broadcom guided Q4 FY25 revenue to about $17.4 billion.
Oct 31, 2025: VMware partner transition deadline for non-invited partners.
2H 2026 to 2029: Planned deployment window for up to 10 GW of accelerators.

How to think about the setup

Bull case. Broadcom turns today’s win into recurring custom silicon orders and cross-sells high-margin network parts. AI spend stays strong into 2026. VMware program changes settle without major churn.

Bear case. Custom chip projects slip on design, tooling, or supply. AI buyers diversify or delay. VMware changes weigh on renewals and push customers toward rivals.

Risks to watch

Execution risk. Custom accelerators are complex. Slips can delay revenue.
Buyer concentration. Heavy exposure to a few AI leaders can add volatility.
Channel shifts. VMware partner changes can create short-term friction
Competition. Broader AI chip options from other vendors can pressure price and share.

Quick investor checklist

Item	Bullish if…	Cautious if…
OpenAI ramp	2026 pilot shipments hold, 2027 scales	Slips on design or supply
Networking attach	Strong orders for optics and switching	Buyers unbundle or swap fabrics
Q4 FY25 delivery	Guidance met with clean margins	Miss on revenue or cash
VMware impact	Smooth renewals, stable attach	Renewals soften after Oct 31

Sources for each line appear below.

Why it matters

AVGO sits at the center of two big markets, AI compute and enterprise software. Today’s partnership adds another vote of confidence in Broadcom’s AI ambitions. The VMware changes affect a different buyer, but they shape the cash engine that funds long projects. Together, they frame how AVGO can grow through 2026.

Sources: