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

Broadcom shares rallied 11.1% on Monday, making it the S&P 500’s top performer of the day, as investors poured back into several high-flying tech companies tied to the artificial intelligence trade. Wall Street is also taking notice of the chipmaker as a derivate play of Alphabet’s growing AI dominance.

Broadcom — one of the biggest suppliers of high-performance, application-specific chips, or ASICs, for hyperscalers — has been on a tear this year, rallying 60% year to date. Monday’s rally saw Broadcom notch its best day since April 9. The stock was also the best performer in the Technology Select Sector SPDR fund (XLK), which tracks the S&P 500 tech sector.

The move in Broadcom comes as investors continue to push shares of Google-parent Alphabet higher. The stock rose more than 5% as the artificial intelligence trade regained some of the recently lost ground.

The two are related 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 specialized 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 have recently lifted their outlooks on Broadcom on enthusiasm about its relationship with Alphabet.

Melius Research’s Ben Reitzes last month reiterated his buy rating on Broadcom and lifted his price target on the stock by $60 to $475, which suggests 39.6% potential upside from Friday’s close.

“Google and its partner, Broadcom, have been at it together with this custom ASIC since 2016, now in its 7th generation. Outside of the Nvidia GPU for AI workloads, the TPU is the most proven ASIC out there — and now it has the most tangible momentum. The decision to develop this product early is now starting to inflect to the upside — delivering for both Broadcom’s AI revenues and Google Cloud (GCP) growth,” Reitzes wrote in an Oct. 27 note to clients.

“While good for Alphabet, it may turn out to be even better for Broadcom, who could have huge upside to its AI revenues with Alphabet and a host of other partners who want a piece of this design expertise,” he continued, adding that the “TPU is rapidly becoming a larger part of Alphabet’s growth strategy.”

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

“Google has long been the main ASIC customer for AVGO but those volumes should become much more meaningful in C26/27,” Curtis wrote in a Nov. 3 note. “Google continues to see the amount of tokens they process per month rise and announced 1,300T in October up from 480T in April 2025. This should grow even more as compute is needed for multimodal models.”

Curtis has a buy rating on shares and lifted his price target by $65 to $480. That implies the stock could jump another 41%.

Dan Ives, Wedbush Securities global head of technology research, told CNBC he is very bullish on Broadcom and Alphabet. Ives owns both stocks in the Dan IVES Wedbush AI Revolution ETF (IVES).

“Broadcom and Alphabet are the new AI plays the market is rediscovering the massive market for ASIC chips with Google leading the charge,” he said. “This could be the most proven ASIC chip in the market and the AI Revolution is still early days … it’s been a historic quick turnaround to the very bullish Street sentiment today.

Alphabet shares are up 21% over the past month, outperforming its “Magnificent Seven” peers and propelling the broader market higher in recent trading sessions. Investors have reacted positively to Google’s latest AI model Gemini 3, its upcoming seventh-generation TPU called “Ironwood,” its advancements in AI image generation with Nano Banana Pro and its new agent platform called “Google Antigravity.”