Meta’s Strategic Move Could Propel Broadcom Stock Beyond 7% Growth in 2026

Key Points

• Meta Platforms and Broadcom have entered a long-term agreement to design custom AI data center processors.

• Meta is set to manufacture its in-house AI chip, codenamed Iris, starting September 2026, aiming to boost its AI data center capacity to 14 gigawatts by next year.

• Broadcom’s fiscal Q2 revenue increased by 48% year-over-year to $22.2 billion, with Q3 guidance projecting revenue of $29.4 billion, an 84% increase.

Broadcom (NASDAQ: AVGO) has announced an extensive partnership with Meta Platforms (NASDAQ: META) to design silicon for AI data centers, potentially leading to a significant boost in Broadcom’s earnings as Meta ramps up its infrastructure. The Iris chip, part of the Meta Training and Inference Accelerators program, is expected to play a central role in this initiative. Meta has increased its capital expenditure forecast for 2026, now estimating between $125 billion and $145 billion, further indicating its commitment to this expansion.

In fiscal Q2 results, Broadcom reported a 48% revenue increase and expects a dramatic rise to $29.4 billion in Q3. Consensus estimates suggest a projected 94% year-over-year revenue jump in fiscal Q4. Broadcom’s forward earnings multiple stands at 20 times, indicating potential growth as it accelerates AI infrastructure support for Meta.