Key Takeaways
- Broadcom shares climbed approximately 7% in premarket trading following projections of AI chip revenue exceeding $100 billion by 2027.
- First quarter fiscal 2026 revenue totaled $19.3 billion, representing 29% year-over-year growth and surpassing analyst expectations.
- The company’s AI semiconductor division generated $8.4 billion in Q1, with Q2 projections at $10.7 billion.
- Management issued Q2 revenue guidance of $22 billion, significantly above the Wall Street consensus of $20.56 billion.
- Truist Securities maintained its Buy recommendation with a $510 target price after reviewing the quarterly results.
Broadcom shares rallied approximately 7% during Thursday’s premarket session after management announced ambitious AI chip revenue targets surpassing $100 billion by 2027, positioning the company as a major competitor to Nvidia in artificial intelligence semiconductors.
The semiconductor giant delivered first quarter fiscal 2026 revenue of $19.31 billion, representing 29% growth compared to the prior year period. Results exceeded the Street consensus of $19.26 billion, with particularly strong performance in the semiconductor division, which outperformed estimates by 0.9%.
The AI semiconductor business generated $8.4 billion during the quarter, topping Truist’s projection of $8.2 billion. Software represented the only underperforming segment, falling 2.8% short of consensus expectations.
Adjusted earnings per share reached $2.05, beating the unguided Street estimate of $2.03. EBITDA totaled $13.13 billion, representing 68% of total revenues — exceeding analyst projections by 2.9% and coming in 100 basis points above the company’s own forecast.
Operating margin reached 66.4%, topping the consensus estimate of 65.7% by 70 basis points.
Major AI Customer Commitments Announced
Management disclosed plans to supply 3 gigawatts of tensor processing units to Anthropic throughout 2027. Additionally, the company will manufacture and deliver OpenAI’s inaugural custom AI semiconductor — exceeding 1 gigawatt — during the same timeframe.
These production volumes position Broadcom at a competitive scale comparable to recent artificial intelligence chip contracts secured by Nvidia and AMD.
Second quarter revenue guidance landed at $22 billion, approximately 7.3% above analyst estimates of $20.5 billion. AI semiconductor revenue for the April quarter is forecast at $10.7 billion — surpassing Truist’s model of $9.6 billion by 11.5%.
Broadcom additionally unveiled a new stock buyback authorization of up to $10 billion running through year-end.
Wall Street Weighs In
Truist Securities reaffirmed its Buy rating and maintained its $510 price target following the quarterly report. The broader Street consensus reflects a strong buy rating, with price targets spanning from $335 to $530.
Jefferies analysts acknowledged that AI spending concerns persist but noted that “Broadcom made a strong case for their AI revenue to outgrow the market.”
RBC Capital adopted a more conservative position, reducing its price target to $340 from $370 while keeping a Sector Perform rating, expressing reservations about artificial intelligence demand sustainability.
UBS reaffirmed its Buy rating, highlighting attractive valuation metrics within the semiconductor segment.
Notwithstanding the premarket surge, AVGO shares remain down approximately 8.3% year-to-date. Nvidia, for context, has declined roughly 2% during the identical timeframe.
Broadcom recently commenced shipments of what management describes as the semiconductor industry’s first 2-nanometer custom compute chip built on its 3.5D platform. The company simultaneously introduced the BroadPeak chip, designed for next-generation 5G and 6G network infrastructure, delivering up to 40% power efficiency improvements.
Inventory levels rose approximately 9 days sequentially to around 60 days, exceeding the typical seasonal decrease of roughly 1 day — a metric analysts will likely monitor in subsequent quarters.
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