Broadcom (AVGO  ) shares rose on Wednesday after the company began shipping its third-generation Co-Packaged Optics Ethernet switch, Tomahawk 6 - Davisson (TH6-Davisson), which sets a new industry benchmark with 102.4 terabits per second of switching capacity.

Designed for AI networking, TH6-Davisson doubles the bandwidth of existing CPO switches, offering major improvements in power efficiency and link stability for large-scale AI infrastructure.

Broadcom designed TH6-Davisson to address the explosive east-west traffic in data centers. GPUs and XPUs exchange massive datasets across AI clusters.

The company integrated Taiwan Semiconductor Manufacturing Co's (TSM  ) Compact Universal Photonic Engine (COUPE) with advanced multi-chip packaging. This design reduces optical interconnect power by 70%, using 3.5 times less energy than traditional optics, and offers a significant energy-saving solution for hyperscale data centers.

Looking ahead, Broadcom is already developing its fourth-generation CPO switch. The tech increases per-channel bandwidth to 400 Gbps, extending its lead in powering scalable, sustainable AI networks.

Broadcom granted CEO Hock Tan a long-term equity award that ties his compensation directly to the company's success with AI, reinforcing its commitment to retaining him through 2030.

This move reflects Broadcom's confidence in Tan's leadership as the company expands into custom AI chips and infrastructure.

Over $400 billion in planned AI infrastructure spending through 2026 from Microsoft (MSFT  ), Meta Platforms (META  ), Alphabet (GOOGL  ) (GOOG  ) Google and Apple (AAPL  ) has created a growth runway for suppliers like Broadcom.

Price Action: AVGO stock was trading higher by 2.43% to $344.50 at last check on Wednesday.

Broadcom stock has gained over 45% year-to-date, surpassing the Nasdaq 100 index's 18% returns, courtesy of AI chip sales.