Broadcom Inc. (AVGO) is making some serious moves in the AI chip wars. The semiconductor giant's CEO Hock Tan recently traveled to South Korea to hammer out a critical supply agreement with Samsung Electronics Co, Ltd (SSNLF), and the stakes couldn't be higher. At issue is high-bandwidth memory (HBM), the specialized memory chips that power artificial intelligence workloads, and Broadcom needs a lot of it.

Here's why this matters: Broadcom oversees the design and production of Alphabet Inc. (GOOGL) Google's Tensor Processing Unit (TPU), the custom AI chips that are becoming an increasingly important alternative to Nvidia's ubiquitous graphics processors. As Google's AI ambitions accelerate with models like Gemini 3, the demand for TPUs is exploding, and Broadcom sits right in the middle of that growth story.

A Deal That Speaks Volumes

According to industry sources and reporting from the Chosun Daily, Broadcom's contract with Samsung represents roughly half of Samsung's entire annual HBM production capacity. That's a massive commitment, covering both 5th-generation HBM3E chips for Google's 7th-generation TPU and the upcoming 6th-generation HBM4 for next year's 8th-generation TPU.

Broadcom apparently pushed for a supply commitment extending through 2028, but Samsung only agreed to guarantee next year's volume. Still, even that limited timeframe represents a substantial win for Broadcom as it races to keep pace with Google's surging chip requirements.

The numbers tell the growth story clearly: Wall Street expects Google's TPU shipments to jump from 1.5-2 million units this year to 8-9 million by 2028. That's more than a fivefold increase in just four years, creating a multi-year tailwind for Broadcom's custom silicon business.

The Market Is Shifting

What makes this particularly interesting is the broader market dynamics at play. Since Google launched its Gemini 3 AI model, the market that was once almost entirely dominated by Nvidia Corp. (NVDA) graphics processing units has begun shifting toward TPUs. Custom chips designed for specific AI workloads are gaining traction, and Broadcom's application-specific integrated circuits are right at the heart of that transition.

The company's stock performance reflects this momentum. Shares have gained over 64% year-to-date, pushing the semiconductor designer toward a $2 trillion valuation. Wall Street is taking notice, with 28 analysts maintaining a consensus price forecast of $370.68.

But some analysts see even more upside ahead. The three most recent ratings from Oppenheimer, Susquehanna, and Morgan Stanley average out to a price target of $442.67, implying roughly 15% upside from current levels.

Analyst Optimism Builds

On Friday, Oppenheimer analyst Rick Schafer maintained an Outperform rating and raised his price target from $400 to $435, citing expected upside from next-generation Tomahawk6 chip volumes ramping up in the second half of next year.

Even more bullish was Morgan Stanley analyst Joseph Moore, who maintained an Overweight rating on Monday and lifted his price forecast from $409 to $443. Moore's reasoning is particularly noteworthy: he expects Broadcom to actually outpace Nvidia in AI processor revenue growth during 2026, largely because of supply constraints that will limit Nvidia's ability to meet surging demand.

That's a bold call, considering Nvidia's dominant position in the AI chip market. But it speaks to how dramatically the competitive landscape is evolving as hyperscalers like Google invest heavily in custom silicon tailored to their specific needs.

Broadcom's strategic positioning extends beyond just memory procurement. The company also reportedly sought additional HBM volume from Samsung beyond what was ultimately agreed upon, suggesting that demand may be outstripping even these substantial supply commitments.

As of Friday's premarket session, AVGO stock was trading 1.16% higher at $385.45, continuing its impressive run as investors bet on the company's expanding role in the AI infrastructure buildout.