Are Broadcom's Custom AI Chips the Key to the Future of AI?

By Keithen Drury – Apr 13, 2026 at 11:00AM ESTKey PointsAnthropic announced it will be using Broadcom-designed chips -- the latest boost for the chipmaker.Broadcom expects this business to generate more than $100 billion annually by the end of next year. It's no secret that artificial intelligence (AI) requires a lot of computing power. Since the build-out began in 2023, Nvidia has dominated the market with its best-in-class GPUs. However, these computing units are expensive and aren't always used to their maximum potential. Every AI company is looking at ways to stretch its spending as far as it will go without sacrificing performance. As a result, more and more companies are starting to work with Broadcom (AVGO +0.49%). Broadcom does a lot of things as a company, but what investors are most excited about are its custom AI chips, known as ASICs (application-specific integrated circuits). Are these the future of AI? Let's take a look. Image source: The Motley Fool. Broadcom just announced another major client Broadcom's custom AI chips thrive in many applications, but they have to be specifically designed for the workloads they encounter (or the workloads must be designed for the chips). This is a key point, because they aren't as flexible as a GPU from Nvidia. With how far AI technology has progressed, an increasing number of companies are comfortable using these specialized chips because they know what the workloads will be like. The best example of a Broadcom custom AI chip is the Tensor Processing Unit (TPU) that it collaborated with Google to make. The TPU has been Google's secret weapon in delivering some of the lowest-cost performance of any AI model on the market. However, instead of using it solely in-house, Google is starting to offer it for sale to other companies. One major company that just signed up to use TPUs is Anthropic, which recently announced it would use TPUs starting in 2027. This caused Broadcom's stock price to soar, but Anthropic isn't the only company getting a Broadcom product. Another major AI start-up, OpenAI, is also working with Broadcom to design a custom chip for its workloads. ExpandNASDAQ: AVGOBroadcomToday's Change(0.49%) $1.84Current Price$373.39Key Data PointsMarket Cap$1.8TDay's Range$369.48 - $375.8452wk Range$161.61 - $414.61Volume383KAvg Vol27MGross Margin64.96%Dividend Yield0.67% All of this adds up to a booming business segment for Broadcom. During its past quarter, the division in which these chips are accounted for generated $8.4 billion in revenue. That includes other products, so the total amount is likely much less than that. However, by the end of 2027, Broadcom expects custom AI chip revenue to exceed $100 billion annually. That's monster growth from this division, and I think it makes Broadcom one of the best stocks to invest in as the AI computing landscape shifts. Does this mean you need to sell your Nvidia shares? Absolutely not. Nvidia is still a great company in its own right, but investors shouldn't be blind to others that are also delivering impressive results.Read NextApr 12, 2026 •By Parkev Tatevosian, CFAGreat News for Broadcom Stock InvestorsApr 12, 2026 •By Daniel FoelberI Don't Use the Term "Generational Buying Opportunity" Lightly. Here's Why It Applies to This Beaten-Down Tech Stock.Apr 12, 2026 •By Geoffrey SeilerCatalyst Alert: Alphabet Just Made Broadcom's Stock a Must-BuyApr 11, 2026 •By John BallardCould Investing $50,000 in Broadcom Stock Make You a Millionaire?Apr 11, 2026 •By Harsh ChauhanWhat AI Fatigue? Anthropic's Red-Hot Growth Is Going to Supercharge These 3 AI Leaders.Apr 10, 2026 •By Daniel SparksWhy Broadcom Stock Is a Better Long-Term AI Stock to Buy Than NvidiaAbout the AuthorKeithen Drury is a contributing Motley Fool technology analyst covering AI, semiconductors, cybersecurity, and SaaS stocks. In addition to The Motley Fool, Keithen is a mechanical engineer and has held roles at Honeywell and smaller industrial companies like Brand Hydraulics and Lincoln Industries. He holds a bachelor’s degree in mechanical engineering from Dordt University.TMFTripleOptionStocks MentionedBroadcomNASDAQ: AVGO$373.45(+0.51%)+$1.90*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.