TLDR
- Broadcom’s Q1 AI revenue more than doubled to $8.4 billion, driven by custom AI accelerators and networking chips.
- CEO Hock Tan projected AI chip revenue “in excess of $100 billion” by 2027.
- Q1 adjusted EPS came in at $2.05, beating estimates of $2.03; revenue of $19.31 billion topped forecasts.
- Broadcom guided Q2 revenue to ~$22 billion, well above the ~$20.5 billion Wall Street expected.
- The company announced a new $10 billion stock buyback and confirmed supply secured through 2028.
Broadcom stock climbed roughly 5% on Thursday after the company posted better-than-expected Q1 results and CEO Hock Tan laid out a bullish case for AI chip demand extending well into 2027.
The jump came after Broadcom reported adjusted earnings of $2.05 per share, just ahead of the $2.03 consensus estimate. Revenue hit $19.31 billion, up 29% year-over-year and above the $19.18 billion Wall Street had penciled in.
Q2 guidance was the real eye-opener. Broadcom expects revenue of around $22 billion next quarter — well above analyst forecasts of $20.5 billion.
AI revenue was the headline number. It more than doubled to $8.4 billion in the quarter, fueled by demand for custom AI accelerators and networking chips.
Tan said demand is no longer just coming from traditional hyperscalers. Companies building AI agents, code-generation tools, and consumer AI platforms are increasingly turning to Broadcom’s custom silicon.
Broadcom’s AI chip work spans some of the biggest names in tech, including Alphabet, Meta, OpenAI, and Anthropic.
Tan told analysts the company has “line of sight” to AI chip revenue exceeding $100 billion annually by 2027 — a number that cleared even the most optimistic Wall Street estimates.
JPMorgan analysts estimate the company can generate between $12 billion and $15 billion per gigawatt of AI capacity by 2027. They lifted their AI revenue estimates “conservatively” to $120 billion or more.
Goldman Sachs noted that Broadcom’s “leadership in AI networking and custom silicon enables the lowest inference cost for its hyperscaler customers.”
Supply Chain and Margins
One concern heading into the print was high-bandwidth memory shortages. Tan addressed it directly, telling analysts that Broadcom has secured memory and leading-edge wafer supply through 2028.
He also pushed back on margin worries tied to shipping more AI chip racks. Tan said the company has gotten yields and costs to a point where the AI business model is “fairly consistent” with the rest of its semiconductor operations.
The company is nearing 10 gigawatts of capacity across six customers — a figure that helped ease investor concerns about concentration risk.
Buyback and Analyst Ratings
Alongside earnings, Broadcom announced a new $10 billion stock buyback, adding another layer of confidence for investors.
The stock currently holds a consensus Strong Buy rating from 30 Wall Street analysts — 28 Buys and 2 Holds — with an average price target of $449.46.
Broadcom’s strong results also lifted related names. Credo Technology stock jumped 10% and Amphenol rose 4%, as investors bet on copper connectivity over optical tech for AI server connections.
Tan said AI chip revenue for the current quarter is expected to hit $10.7 billion, suggesting momentum isn’t slowing.
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