SAN JOSE — OpenAI and Broadcom announced the co-development and launch of a custom artificial intelligence (AI) chip named Jalapeño, designed for large language model inference rather than training.

This initiative follows Broadcom's establishment of the AI XPV Platform on June 9, partnering with initial anchor investors Apollo and Blackstone. The platform aims to provide over 20 gigawatts of compute capacity and networking solutions by 2028, serving frontier AI labs such as Anthropic and OpenAI.

Broadcom reported net revenue of $22.2 billion in the second quarter, a 48% year-over-year increase. The semiconductor solutions segment contributed $15 billion, up 79% from the previous year. Leadership anticipates this segment will reach $16 billion in revenue in the third quarter. Infrastructure software generated $7.2 billion, a 9% increase, slightly below analyst projections of $7.3 billion. Non-GAAP earnings per share rose 54% to $2.44, surpassing the consensus forecast of $2.40. Operating cash flow increased 60% to $10.5 billion. The company concluded the quarter with $19.6 billion in cash and $2.3 billion in short-term debt.

Broadcom holds more than 60% market share in the custom application-specific integrated circuit (ASIC) market, with clients including OpenAI, Alphabet, and Meta Platforms. Analyst Matt Bryson commented: "Net, we see this development as a probable positive for AVGO (and OpenAI assuming the silicon eventually works as presented), but also wouldn't be surprised if initial shipments are more modest in scale and broader adoption requires a 2nd or 3rd (or 4th) iteration of the design."

Broadcom stock has gained 9% year-to-date and offers a dividend yield of 0.71%. Its Tomahawk 6 switch chip, an Ethernet part with a capacity of 102.4 terabits per second, entered volume production in March 2026. The Jericho 4 fabric chip, operating at 51.2 terabits per second, began shipping in August 2025. Nvidia's Spectrum-X1600 switch is projected to enter volume production in the second half of 2026, while Cisco Systems' Silicon One G300 has a switching capacity of 102.4 terabits per second. Tech Insider reported: "Generally, for every dollar that hyperscalers spend on custom AI accelerators, they spend an additional $0.40-$0.60 on networking infrastructure."

Analysts have an average target price of $516.59 for Broadcom stock, indicating a potential upside of approximately 37% from current levels. Of 42 analysts, 34 have a "Strong Buy" rating, three have a "Moderate Buy" rating, and five have a "Hold" rating. The stock has a forward price-to-earnings ratio of 35.6, a price-to-sales multiple of 27.1, and a price-to-cash flow multiple of 47.3.