Broadcom Sees AI Revenue Soaring Past $100 Billion by 2027
Broadcom delivered a powerful earnings report Wednesday, beating Wall Street expectations and projecting a massive surge in artificial intelligence-related sales. The chip designer and infrastructure software provider saw its stock rise 5% in extended trading after announcing better-than-forecast results and providing guidance that significantly exceeded consensus estimates.
CEO Hock Tan was unequivocal about the company’s AI trajectory, stating on a conference call with analysts, “We have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027,” adding that the necessary supply chain has already been secured. This bold target underscores Broadcom’s central role in the AI infrastructure build-out, a position that is translating directly into financial performance.
Earnings and Revenue Beat Estimates
For its fiscal first quarter ended February 1, Broadcom reported adjusted earnings per share of $2.05, edging past the $2.03 estimate from LSEG. Revenue reached $19.31 billion, a 29% year-over-year increase, compared to the $19.18 billion consensus. Net income for the period rose to $7.35 billion, or $1.50 per share, from $5.50 billion, or $1.14 per share, in the prior year.
The company’s outlook for the second quarter was even more striking. Broadcom forecast an adjusted profit margin of 68%, above the 66% StreetAccount consensus, and revenue of $22 billion, handily beating the $20.56 billion average estimate. This guidance includes semiconductor solutions revenue of $14.8 billion, substantially higher than the $13.06 billion consensus.
AI Drives Semiconductor Surge, Software Faces Headwinds
The quarter’s standout performance was fueled by a monumental jump in AI-specific revenue. AI sales soared 106% year-over-year to $8.4 billion, driven by what Tan described as “robust demand for custom AI accelerators and AI networking.” This fulfills and exceeds the doubling projection he made just three months prior.
Within its two main segments, semiconductor solutions revenue hit $12.52 billion, surpassing the $12.25 billion expected by analysts. This segment also saw the announcement of new Wi-Fi 8 chips. Conversely, infrastructure software revenue was $6.80 billion, falling short of the $7.02 billion StreetAccount consensus. Tan addressed market concerns that generative AI might disrupt mature software businesses, asserting, “Our infrastructure software is not disrupted by AI,” referencing the company’s 2023 acquisition of VMware.
Deep Ties to Cloud Giants and Strategic Investments
Broadcom’s business model is uniquely positioned as a critical partner to the world’s largest cloud providers. The company helps firms like Taiwan Semiconductor Manufacturing Company‘s clients—including Amazon, Google, Meta, and Microsoft—translate their custom chip designs into physical silicon. This “custom silicon” strategy is bearing fruit with named clients.
Tan provided specific deployment forecasts for key accounts. He called for one gigawatt of Google tensor processing units for AI startup Anthropic in 2026, scaling to over three gigawatts in 2027. For Meta‘s MTIA custom accelerator, Tan stated unequivocally, “MTIA roadmap is alive and well,” noting it is currently shipping and that Meta is targeting multiple gigawatts of capacity. He also said OpenAI would deploy over one gigawatt of its first-generation custom chip in 2027.
These projections follow a reported $10 billion custom chip order from Anthropic in December, a relationship now under scrutiny. Last week,
