OpenAI Partners Broadcom for Custom AI Chips, Nvidia Competes

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The artificial intelligence sector is seeing significant shifts as major players forge new partnerships and expand their hardware capabilities. OpenAI is collaborating with Broadcom to develop custom AI chips by 2026, a move aimed at reducing its reliance on Nvidia and enhancing AI model efficiency. This partnership has boosted Broadcom's stock, with the company reporting record third-quarter revenue of $16 billion, largely driven by a 63% increase in AI semiconductor revenue. Broadcom's AI chip backlog now stands at $110 billion, with custom chip orders expected to ship starting next year. This development positions Broadcom as a strong contender in the AI hardware market, potentially impacting competitors like Nvidia and AMD. Meanwhile, Amazon continues its AI investments, particularly within AWS, and is also taking security measures by restricting access to its backed AI startup, Anthropic, for certain foreign entities. Ciena is experiencing increased demand for its optical networking solutions, driven by the massive infrastructure buildouts required for AI, leading to billions in investment from cloud providers and telcos. Other companies like Aehr Test Systems are playing a crucial role in ensuring the reliability of AI chips through rigorous testing, while Hon Hai Precision Industry is seeing sales rise due to increased AI server production. In contrast, C3.ai's stock has fallen despite the general AI enthusiasm, due to disappointing financial results.

Key Takeaways

OpenAI is partnering with Broadcom to create custom AI chips by 2026, aiming to decrease reliance on Nvidia.
Broadcom reported record third-quarter revenue of $16 billion, with AI semiconductor revenue surging 63% to $5.2 billion.
A significant deal worth over $10 billion for custom AI chips with a client, widely believed to be OpenAI, is set to ship in 2026.
Broadcom's stock saw a substantial increase following the announcement of the OpenAI partnership.
Amazon is restricting access to its backed AI startup Anthropic for certain foreign entities due to security concerns.
Ciena is experiencing increased demand for optical networking solutions driven by AI infrastructure investments from cloud providers and telcos.
Hon Hai Precision Industry, a key partner for Nvidia, reported a 10.6% year-over-year increase in sales, driven by AI server production.
Aehr Test Systems is seeing growth due to its role in providing reliability testing for AI semiconductors.
C3.ai's stock has dropped significantly despite AI market trends, following disappointing financial results.
The AI sector is witnessing a trend of major tech companies developing proprietary hardware to meet the demands of advanced AI models.

OpenAI partners with Broadcom for custom AI chips

OpenAI is teaming up with Broadcom to design and produce custom AI chips by 2026. This partnership aims to reduce OpenAI's reliance on Nvidia and improve its own AI infrastructure. Broadcom's AI revenue has already seen a significant increase of 63% year-over-year due to similar client orders. This move follows a trend of major tech companies developing their own hardware to meet the growing demands of complex AI models.

Broadcom stock jumps on OpenAI AI chip deal

Broadcom's stock price increased by 12% following the announcement of a partnership with OpenAI to create custom AI chips by 2026. These chips will be used internally by OpenAI to improve AI model efficiency and cut costs, lessening their dependence on third-party hardware. Broadcom's expertise in semiconductors is expected to strengthen its position in the AI hardware market.

Broadcom's strong earnings make it a top AI stock pick

Broadcom reported record revenue of $16 billion in its third quarter, with AI semiconductor revenue jumping 63% to $5.2 billion. The company also raised its fourth-quarter revenue guidance to $17.4 billion. A significant factor is a new deal worth over $10 billion for custom AI chips with a client widely believed to be OpenAI, set to ship in 2026. This performance, coupled with Nvidia's recent slight miss, positions Broadcom as a strong contender in the AI investment space.

Broadcom and OpenAI partner on AI chips, boosting stocks

Broadcom has partnered with OpenAI to develop custom AI accelerator chips for release in 2026, causing Broadcom's stock to surge 16%. This collaboration aims to provide OpenAI with chips for internal use, challenging Nvidia's market dominance. Broadcom's CEO expects accelerated revenue growth from AI chips, with Q2 sales reaching $160 billion and AI semiconductor revenue at $52 billion. This move aligns with other tech giants developing proprietary AI hardware.

Broadcom's AI chip strategy positions it for growth

Broadcom is strengthening its position in the AI hardware market through a partnership with OpenAI to co-develop custom AI accelerator chips starting in 2026. This move aims to reduce reliance on Nvidia and offers energy-efficient AI performance. Broadcom's AI semiconductor revenue is projected to reach $6.2 billion by the fourth quarter of fiscal 2026. Strategic alliances with hyperscalers and manufacturing by TSMC, along with the acquisition of VMware, further enhance its end-to-end AI solutions.

Broadcom lands OpenAI as customer, impacting Nvidia and AMD

Broadcom has reportedly secured OpenAI as a major new customer for its AI chips, with production set to begin next year for internal use. This partnership aims to help OpenAI reduce its dependence on Nvidia's processors. The news caused Broadcom's stock to rise significantly, while Nvidia and AMD saw slight dips. OpenAI's move reflects a broader trend of hyperscalers seeking diverse suppliers for their AI hardware needs.

C3.ai stock drops despite AI hype

C3.ai, a company with the stock ticker 'AI', has seen its stock price fall by 34% in the past month. This decline follows disappointing preliminary and quarterly results, with revenue falling 19% to $70.3 million and losses widening. The company has pivoted its focus multiple times since its founding. Despite new CEO Stephen Ehikian taking over, analysts remain skeptical about its performance and future guidance.

Aehr Test Systems is a key player in AI chip reliability

Aehr Test Systems has seen its stock rise over 300% since April, driven by its crucial role in ensuring the reliability of semiconductors for AI data centers. As AI models become more complex and chips are vertically integrated, the need for rigorous testing increases significantly. Aehr provides essential reliability testing systems, positioning it as a vital supplier for hyperscalers building massive data centers. Despite recent revenue challenges, its backlog has grown, indicating strong future demand.

Aehr Test Systems and Figma are AI stocks to watch

Aehr Test Systems is adapting its silicon carbide chip testing equipment for AI data center needs, addressing the critical requirement for low failure rates in vertically integrated chips. While its revenue decreased in fiscal 2025, its order backlog has doubled, signaling potential growth. Figma, a cloud-based design software, is also transforming graphic design with AI automation and generative capabilities, showing strong revenue growth and a high user base, though its valuation is currently high.

Amazon restricts Anthropic AI access for security

Amazon-backed AI startup Anthropic is limiting access to its services for certain foreign entities, particularly those primarily controlled by countries like China, due to security concerns. This move aims to prevent the misuse of its advanced AI technology for military or intelligence purposes. Analysts predict an 11.48% upside for Amazon's stock, though GuruFocus suggests a potential 10.51% downside based on its GF Value estimate.

Ciena sees AI driving optical networking demand

Ciena reported strong third fiscal quarter earnings, with revenues of $1.22 billion beating estimates, driven by a 34% increase in optical networking revenue. CEO Gary Smith highlighted a new era of network investment fueled by AI, with cloud providers and telcos investing billions. Ciena is shifting its focus from broadband development to coherent routing and optical interconnects needed for AI buildouts, while also cutting staff. The company sees significant growth opportunities with hyperscalers and 'neoscalers' requiring advanced optical infrastructure.

Lyno AI gains traction over meme coins

Traders are shifting their interest from meme coins to AI projects like Lyno AI, which offers real utility and advanced technology. Lyno AI features a secure, audited AI-powered arbitrage system that detects profitable cross-chain trades across multiple networks. Token holders govern the platform and can earn rewards through their LYNO tokens. The project is currently in its early bird presale phase, offering tokens at $0.050.

Broadcom's strong results boost AI outlook

Broadcom reported robust third-quarter results, with record revenue of $15.95 billion, up 22% year-over-year, driven by a 63% surge in AI-centric revenue to $5.2 billion. The company also raised its fourth-quarter revenue guidance to $17.4 billion. CEO Hock Tan announced a new customer order for custom AI accelerators, increasing Broadcom's backlog to $110 billion. These strong results indicate continued AI adoption and suggest accelerating growth for Broadcom in 2026.

True AI platform aims to expand crypto derivatives market

Benjamin Bilski of True, a Solana-based AI trading platform, believes that U.S. access to perpetual futures would validate their model and grow the market. True combines a high-speed off-chain engine with on-chain settlement, using AI to guide traders responsibly and manage risks. The platform aims to aggregate liquidity across chains and establish unified settlement standards. True's $TRUE token is designed for utility, with a significant portion of platform fees flowing back into ecosystem growth.

Tech and AI stocks rally post-jobs report

Tech and AI stocks, including Amazon, Netflix, and Broadcom, surged in August 2025 following a positive jobs report and expectations of Federal Reserve rate cuts. Broadcom reported $16 billion in Q3 revenue with 63% AI growth, positioning it as a key AI infrastructure provider. Netflix is using AI to innovate content production, reducing costs significantly. Amazon's AI investments in AWS are notable, but the company faces mixed signals regarding growth and policy changes. Macroeconomic risks remain, potentially impacting AI-dependent firms.

Hon Hai sees sales rise due to AI demand

Hon Hai Precision Industry Co., a key production partner for Nvidia, reported a 10.6% year-over-year increase in August sales, reaching $19.8 billion. The company expects third-quarter sales to grow sequentially and year-over-year, driven by significant increases in cloud product shipments and AI server production. This growth in AI infrastructure demand is helping to offset a decline in its consumer electronics business. Hon Hai is also expanding its manufacturing capacity in the U.S. to navigate geopolitical shifts.