Nvidia's Empire Just Took A Hit - Broadcom's $10 Billion Deal Is The Plot Twist

Benzinga
2025.09.05 15:39
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OpenAI has signed a $10 billion deal with Broadcom to co-design AI chips, challenging Nvidia's dominance in the AI hardware market. This partnership is expected to boost Broadcom's custom chip business, with analysts predicting it will outpace Nvidia's growth by 2026. Broadcom's stock surged 15% following the announcement, indicating a significant shift in the semiconductor landscape. OpenAI's move towards hardware autonomy could redefine the AI ecosystem, suggesting a future where major AI companies also become chipmakers.

For years, Nvidia Corp NVDA has been the undisputed king of AI hardware, but OpenAI just threw a curveball. The ChatGPT maker has inked a $10 billion deal with Broadcom Inc AVGO to co-design and mass-produce its own AI chips by 2026, signaling a seismic shift away from Nvidia's grip on the AI ecosystem. Broadcom's stock surged 15% on the news, vaulting its market cap to $1.7 trillion, while the industry digested what could be a new era in AI hardware independence.

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Broadcom's Big Break

Broadcom CEO Hock Tan called the mystery deal a source of "immediate and fairly substantial demand," confirming shipments will ramp up next year, reported Financial Times. Analysts are already pointing to this as a landmark moment, with HSBC projecting Broadcom's custom chip business to outpace Nvidia's growth by 2026.

The partnership positions Broadcom as the go-to chipmaker for AI giants eager to loosen Nvidia's chokehold on supply chains. Shares have now climbed over 30% this year, fueled by a custom-chip gold rush that could redefine the semiconductor hierarchy.

Read Also: Nvidia’s Inventory Spike Isn’t A Warning Sign – It’s A War Chest

OpenAI Follows Big Tech's Playbook

OpenAI isn't just mimicking Alphabet Inc GOOGL GOOG, Amazon.com Inc AMZN and Meta Platforms Inc META, who've all built custom silicon to power their AI ambitions—it's raising the stakes. OpenAI CEO Sam Altman has been vocal about doubling compute capacity to meet the demands of GPT-5, and now he's betting on hardware autonomy to get there.

Nvidia remains a critical supplier, but OpenAI's voracious appetite for compute is driving a rethink of how it scales infrastructure. The move hints at a future where AI powerhouses aren't just software titans but vertically integrated chipmakers in their own right.

Broadcom's deal is more than a revenue win; it's a statement that Nvidia's dominance is not untouchable. If OpenAI's silicon bet pays off, it could spark a wave of custom chip development, reshaping who profits from the AI boom.

For Nvidia investors, this isn't panic time—but it's definitely a plot twist worth watching.

  • Broadcom Vs. Nvidia: The AI Chip War You’re Not Watching

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