(Reuters) -Broadcom ( AVGO ) shares jumped nearly 9% in premarket trading on Friday after the chipmaker unveiled a blockbuster $10 billion AI chip order from a new customer, fueling optimism about its strategy to design custom chips.

The deal, which Broadcom ( AVGO ) said will "materially boost" AI revenue, comes as the company deepens its role in the generative AI boom by designing custom semiconductors for cloud giants seeking alternatives to pricier Nvidia ( NVDA ) chips.

Adding to momentum for the chipmaker, CEO Hock Tan, who has led Broadcom ( AVGO ) for nearly two decades and steered it to the center of the AI boom, announced he would stay at the helm for at least five more years.

If the share gains hold, the chipmaker would add roughly $125 billion to its $1.44 trillion market valuation.

Broadcom's ( AVGO ) latest deal has fueled speculation that OpenAI is the unnamed customer, following a Financial Times report that the ChatGPT maker is working with Broadcom ( AVGO ) to develop its own custom AI chips.

"This new business with OpenAI reflects a key strength of Broadcom ( AVGO ) which lies in working closely with customers to develop application-specific chips which, in turn, aim to deliver superior performance and energy efficiency at lower cost for specific jobs," said Russ Mould, investment director at AJ Bell.

Analysts at J.P.Morgan, Bernstein and Morgan Stanley said that the timing and scale of the deal suggest OpenAI is likely behind it.

OpenAI was working with Broadcom ( AVGO ) and TSMC to build its first in-house chip but dropped its ambitious foundry plans due to the costs and time needed to build a network, Reuters reported last year.

The company said it expects "significantly improved" AI revenue growth in fiscal 2026.

Investors have bet big on AI-driven chipmakers, propelling Broadcom's ( AVGO ) shares 32% higher this year after the company's valuation crossed $1 trillion in December.

The stock trades at 38.6 times its forward earnings estimates, a premium to Marvell's 20.3 multiple and the broader S&P 500 index's 22.5, according to LSEG data.

(Reporting by Rashika Singh and Akash Sriram in Bengaluru; Editing by Mrigank Dhaniwala and Arun Koyyur)