Broadcom is joining Alphabet in the AI rally. Why investors are jumping in

broadcom Shares gained 11.1 percent on Monday. S&P 500s It was the best performer of the day as investors flocked to several high-tech companies linked to the AI ​​trade. Wall Street is also considering the chip maker as something of a play. alphabet Artificial intelligence dominance is increasing.

Broadcom, one of the largest suppliers of high-performance, application-specific chips, or ASICs, for hyperscalers is on a tear this year, up 60% so far. Monday’s rally saw Broadcom post its best day since April 9. Technology Select Sector SPDR fund (XLK)The S&P 500 tracks the technology sector.

The move at Broadcom comes as investors continue to bid up shares of Google’s parent company Alphabet higher. The stock rose more than 5% as AI trading regained some recently lost ground.

The two are linked through ASICs: Google is a major customer of Broadcom’s ASIC business, as Broadcom helps design and manufacture Google’s tensor processing units (TPUs). These are Google’s in-house custom AI chips used for the company’s internal AI infrastructure. Google TPUs are considered a competitor to Nvidia’s graphics processing units (GPUs) for AI workloads.

Analysts recently raised their eyebrows on excitement over Broadcom’s relationship with Alphabet.

Ben Reitzes of Melius Research last month reiterated his buy rating on Broadcom and raised his price target on the stock by $60 to $475; This indicates a potential increase of 39.6% from Friday’s close.

“Google and its partner Broadcom have been working with this particular ASIC since 2016, and it is currently in its 7th generation. Outside of the Nvidia GPU for AI workloads, TPU is the most proven ASIC on the market and currently has the most tangible momentum. The decision to develop this product early is now starting to have a positive impact, driving both Broadcom’s AI revenues and growth for Google Cloud (GCP),” Reitzes wrote in his Oct. 27 post. Note to customers.

“While it’s good for Alphabet, it could be even better for Broadcom, which could get a big boost in AI revenues with Alphabet and many other partners looking to get a piece of that design expertise,” he continued, “TPU is quickly becoming a larger part of Alphabet’s growth strategy.”

Jefferies analyst Blayne Curtis, who has the highest price target among analysts on Broadcom, according to LSEG, called the stock a top pick earlier this month and said ASICs have reached an “inflection point” as Google’s need for custom chips continues to grow.

“Google has long been AVGO’s primary ASIC customer, but those volumes should become much more significant on C26/27,” Curtis wrote in a Nov. 3 note. “Google continues to see the amount of tokens it processes per month increasing and announced an increase from 480 tonnes in April 2025 to 1,300 tonnes in October. This figure needs to increase further as computing is required for multimodal models.”

Curtis has a buy rating on the shares and raised his price target by $65 to $480. This means the stock could rise another 41%.

Dan Ives, head of global technology research at Wedbush Securities, told CNBC he’s quite optimistic about Broadcom and Alphabet. Ives owns both shares.

“Broadcom and Alphabet are new AI plays where the market, led by Google, is rediscovering the huge market for ASIC chips,” he said. “This may be the most proven ASIC chip on the market, and the AI ​​Revolution is still in its infancy… It’s been a historic quick turnaround to today’s bullish Street sentiment.

Alphabet shares are up 21% over the past month, outperforming their “Magnificent Seven” peers and sending the overall market higher in recent trading sessions. Investors have responded positively to Google’s newest AI model, Gemini 3, its seventh-generation TPU called “Ironwood”, its advancements in AI rendering with Nano Banana Pro, and its new broker platform called “Google Antigravity”.