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Key Takeaways

• Broadcom and Apple extended their chip partnership through 2031, covering custom ASIC silicon across multiple generations of Apple products.
• The real story is not consumer device chips — Broadcom technology is embedded inside Apple’s in-development AI server chips, codenamed Baltra, targeted for rollout as early as 2027.
• Apple accounts for roughly 20% of Broadcom’s annual revenue. Locking that in through 2031 and expanding it into AI server infrastructure reduces a long-standing revenue concentration risk.
• Broadcom’s AI semiconductor revenue hit $10.8 billion in Q2 fiscal 2026, up 143% year over year. Q3 AI revenue guidance is $16 billion, which would represent more than 200% year-over-year growth.
• Full-year AI semiconductor revenue guidance for fiscal 2026 stands at $56 billion, roughly 180% growth over fiscal 2025. CEO Hock Tan has targeted more than $100 billion in AI semiconductor revenue for fiscal 2027.
• Broadcom now has custom silicon relationships spanning Google, Meta, OpenAI, Anthropic, and Apple — five of the most important AI compute buyers in the world.
• The primary risk: Apple’s in-house silicon push. The C1 and C1X cellular modems show Apple can move fast. If that extends into RF and connectivity, the 2031 deal delays but does not eliminate replacement risk.

Broadcom Locked In Apple Until 2031

Broadcom (AVGO) was up roughly 4% to 5% today on a news item most readers will underestimate. On the surface it looks like a routine supply agreement renewal. It is not.

Broadcom said on Monday that it and Apple have agreed to expand their partnership through 2031 to develop and supply a range of custom chips. The filing covers custom ASIC silicon — application-specific integrated circuits — that will appear across multiple generations of Apple products. Financial terms were not disclosed.

Here is why this is bigger than it sounds.

Broadcom technology is being incorporated into Apple’s in-development AI server chips, internally codenamed Baltra, which are targeted for rollout as early as next year. The purpose of those chips is to support the cloud computing infrastructure that runs Apple Intelligence. This is not Wi-Fi chips for the next iPhone. This is Broadcom embedded inside Apple’s proprietary AI server infrastructure.

That changes the investment math considerably.

The conventional read on AVGO’s Apple relationship has always been: Apple is your biggest customer, Apple is trying to bring chips in-house, that is a long-term risk. And Apple has moved aggressively — designing its own M-series processors and introducing its C1 cellular modem. But even so, the company continues to rely heavily on Broadcom for advanced wireless connectivity and RF components. Now, instead of Apple reducing Broadcom dependency, the relationship is expanding in scope — from consumer device connectivity into cloud AI infrastructure.

That is the part the market has not fully worked through yet.

Broadcom has also been expanding its AI chip business more broadly, working with Alphabet and Meta Platforms on custom silicon for data centers. The new multi-year agreement with Apple provides long-term revenue visibility from one of its largest customers. Apple accounts for roughly 20% of Broadcom’s annual revenue. Locking that relationship in through 2031, and expanding it into AI server territory, materially reduces the revenue risk that has hung over the stock for years.

A quick tangent worth knowing: Broadcom co-developed a custom AI accelerator called Jalapeño with OpenAI — unveiled roughly eight months after the two companies first announced their chip deal, representing one of the fastest ASIC development cycles in high-performance semiconductors. Add the Apple Baltra work to that, and Broadcom is quietly building a custom silicon design practice that spans the most important AI compute buyers on the planet: Google, Meta, OpenAI, Anthropic, and now Apple.

The numbers underneath all of this: In Q1 fiscal 2026, Broadcom’s AI semiconductor revenue grew 106% year over year to $8.4 billion, above its own forecast. Then Q2 topped that: AI semiconductor revenue hit $10.8 billion, up 143% year over year, also above guidance. Total Q2 revenue came in at $22.2 billion, up 48% year over year. For Q3 (ending August 2, 2026), Broadcom guides for $29.4 billion in total revenue, up 84% year over year, with AI semiconductor revenue expected at $16 billion — a figure that would represent more than 200% year-over-year growth.

The forward visibility is also significant. Broadcom has guided for $56 billion in full-year AI semiconductor revenue for fiscal 2026, representing roughly 180% growth over fiscal 2025. For fiscal 2027, CEO Hock Tan has reiterated a target of more than $100 billion in AI semiconductor revenue, supported by multi-year contracts across six core hyperscaler customers.

On valuation: according to 48 analysts polled by S&P Global, the consensus rating on AVGO is Strong Buy with an average 12-month price target of roughly $524. The stock has pulled back sharply from its 52-week high of $495 hit in early June, and currently trades in the $360s range. That gap between where the stock is and where analysts think it should be is worth noting — though forward earnings assumptions carry real execution risk in a market where expectations for AI revenue growth are already priced aggressively across the sector.

The risk worth watching: Apple’s in-house silicon roadmap. Apple has been steadily bringing chip design internal, including its C1 and C1X cellular modems. If Apple accelerates that push into RF and connectivity over the next few years, the 2031 extension does not fully eliminate the long-term replacement risk. It pushes it further out — and buys Broadcom time to compound the AI server relationship deep enough that the risk becomes secondary.

That last part is the real question heading into the back half of 2026. How deep does the Baltra relationship go, and what does it look like when Apple starts deploying those servers at scale?

For informational and educational purposes only. Not investment advice. Trading involves risk, including loss of principal.