Broadcom (AVGO 1.66%) The stock is rising on Thursday following new contract news. The company’s share price rose 1.9% as of 11 a.m. ET, according to data from S&P Global Market Intelligence. The stock had previously risen as much as 4% intraday, but retreated in subsequent trading in tandem with broader market moves.

According to a report published today by Benzinga, Broadcom has won new contracts to provide application-specific integrated circuits (ASICs) for artificial intelligence (AI). The report cites reporting from JPMorgan Chase & Co. Analyst Harlan Sur says the semiconductor company has signed important contracts to supply chips to OpenAI, the company behind ChatGPT.

Broadcom collects successes in the field of AI

According to Sur, Broadcom has been selected by OpenAI to supply first and second generation ASIC AI chips. The news follows reports and announcements that the semiconductor company is also providing ASICs for artificial intelligence to alphabet, Meta-platformsand ByteDance – the company behind the popular social media app TikTok. Sur notes that Broadcom has also secured a fifth, as yet undisclosed customer for ASIC AI chips.

What’s next for Broadcom shares?

Broadcom’s sales of ASIC AI chips to OpenAI and its unnamed new partner will increase in 2026. The company’s new 2-nanometer and 3-nm platforms appear to be producing success, and improvements in transistor density, performance and power consumption could help attract additional customers.

Thanks to strong business performance and encouraging prospects in the AI ​​sector, Broadcom shares have gained around 51% since the beginning of the year. This development has pushed the company’s price-earnings ratio up to over 35.

AVGO PE Ratio (Forward) data from YCharts

Although the company trades at a growth-linked valuation, Broadcom has a strong competitive position in its corner of the AI ​​chip market and additional advantages created by its software businesses. With signs that the company is still in the early stages of benefiting from AI-related tailwinds, the stock continues to look like a worthwhile investment even after some big gains this year.