Apple just announced a multi-billion-dollar deal with Broadcom

Broadcom Inc (NASDAQ: AVGO) is in focus this morning after Apple Inc (NASDAQ: AAPL) announced a multi-year, multi-billion-dollar agreement with the chipmaker.

Details of the Apple-Broadcom deal

Last night, the iPhone maker announced a deal with Broadcom to make 5G radio frequency components, including FBAR filters, in the United States.

In 2021, Apple had pledged $430 billion to the U.S. economy through 2026. This agreement with Broadcom, it confirmed in a press release today, was a part of that commitment.

We are thrilled to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing. We’ll continue to deepen our investments in the U.S. economy.

Broadcom is scheduled to report its Q2 financial results next week. Consensus is for it to earn $9.35 a share this quarter versus $8.39 per share a year ago.

Should you buy Broadcom stock?

The said components will be built in several cities, including Fort Collins where Apple already supports over 1,100 jobs at a Broadcom facility.

Year-to-date, Broadcom stock is up nearly 25%. Explaining what this agreement means for its share price moving forward, CFRA Research senior equity analyst Angelo Zino said today on CNBC’s “Squawk Box”:

I think it’s definitely a positive in terms of improving the visibility for Broadcom over the next couple of years. [It was] definitely an overhang.

Zino currently has a “buy” rating on the chip stock. His $750 price target on its suggests about a 10% upside from here.

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