Quick Overview
- AI-related revenue at Broadcom more than doubled in Q1, reaching $8.4 billion thanks to custom AI accelerators and networking solutions.
- CEO Hock Tan forecasted AI chip revenue surpassing $100 billion by fiscal 2027.
- First-quarter adjusted earnings per share reached $2.05, topping analyst expectations of $2.03, while revenue of $19.31 billion exceeded projections.
- Management issued Q2 revenue guidance of approximately $22 billion, significantly higher than the ~$20.5 billion consensus estimate.
- A fresh $10 billion share repurchase program was unveiled, with supply chain commitments locked in through 2028.
Shares of Broadcom surged approximately 5% during Thursday’s trading session following the semiconductor giant’s impressive first-quarter performance and an optimistic outlook from CEO Hock Tan regarding sustained AI chip demand through 2027.
The rally followed Broadcom’s announcement of adjusted earnings reaching $2.05 per share, narrowly surpassing the consensus target of $2.03. Total revenue came in at $19.31 billion, representing a 29% year-over-year increase and exceeding Wall Street’s $19.18 billion projection.
The forward guidance proved even more compelling. For the second quarter, Broadcom anticipates generating approximately $22 billion in revenue — substantially above the $20.5 billion analyst consensus.
The standout metric was artificial intelligence revenue, which more than doubled to reach $8.4 billion during the quarter, powered by robust demand for customized AI accelerators and advanced networking chips.
According to Tan, demand has expanded beyond traditional hyperscale cloud providers. Organizations developing AI agents, automated code-generation platforms, and consumer-facing AI applications are increasingly adopting Broadcom’s tailored semiconductor solutions.
The company’s AI chip portfolio serves several technology industry leaders, including Alphabet, Meta, OpenAI, and Anthropic.
During the analyst call, Tan stated the firm has clear “line of sight” toward AI chip revenue climbing past $100 billion annually by 2027 — a projection that exceeded even the most bullish Wall Street predictions.
JPMorgan analysts calculate the company could generate between $12 billion and $15 billion per gigawatt of AI infrastructure by 2027. They increased their AI revenue projections “conservatively” to $120 billion or higher.
Goldman Sachs highlighted that Broadcom’s “leadership in AI networking and custom silicon enables the lowest inference cost for its hyperscaler customers.”
Supply Chain Security and Profitability
A key concern entering the earnings report centered on potential high-bandwidth memory supply constraints. Tan directly addressed this issue, informing analysts that Broadcom has locked in memory supplies and cutting-edge wafer production capacity extending through 2028.
He also dismissed profitability concerns related to increased AI chip rack shipments. Tan explained that the company has optimized yields and reduced costs to the point where the AI division’s business model aligns “fairly consistent” with its broader semiconductor operations.
The firm is approaching 10 gigawatts of deployed capacity distributed across six major customers — a metric that helped alleviate investor anxiety about customer concentration risks.
Share Repurchase Program and Wall Street Sentiment
Alongside the quarterly results, Broadcom unveiled a new $10 billion share buyback authorization, providing additional confidence to the investment community.
Wall Street maintains a consensus Strong Buy rating on the stock based on input from 30 analysts — comprising 28 Buy ratings and 2 Hold ratings — with a mean price target of $449.46.
Broadcom’s robust performance created positive momentum for related companies. Credo Technology shares climbed 10% and Amphenol advanced 4%, as market participants grew more optimistic about copper connectivity solutions over optical technologies for AI server infrastructure.
Tan indicated that AI chip revenue for the ongoing quarter should reach $10.7 billion, signaling continued strong momentum in this segment.
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