Key Takeaways
- Broadcom’s first quarter AI revenue surged past $8.4 billion, more than doubling year-over-year thanks to strong demand for custom AI accelerators and networking solutions.
- CEO Hock Tan forecasts AI chip revenue will surpass $100 billion annually by 2027.
- First quarter adjusted earnings per share reached $2.05, exceeding analyst expectations of $2.03; total revenue of $19.31 billion beat projections.
- Management guided second quarter revenue to approximately $22 billion, significantly above Wall Street’s $20.5 billion consensus.
- Broadcom unveiled a fresh $10 billion share repurchase program and confirmed its supply chain is locked in through 2028.
Broadcom shares gained approximately 5% Thursday following the semiconductor giant’s impressive first quarter performance and CEO Hock Tan’s optimistic outlook on AI chip demand continuing through 2027 and beyond.
The rally followed Broadcom’s disclosure of adjusted earnings reaching $2.05 per share, narrowly beating the Street’s $2.03 consensus figure. Total revenue reached $19.31 billion, marking a 29% year-over-year increase and surpassing Wall Street’s $19.18 billion projection.
The second quarter outlook particularly caught investors’ attention. Management expects approximately $22 billion in revenue for the coming quarter — substantially higher than the $20.5 billion analysts had anticipated.
The AI segment stole the spotlight. Revenue from AI-related products more than doubled, reaching $8.4 billion during the quarter, propelled by robust demand for custom AI accelerators and networking infrastructure.
Tan emphasized that demand has evolved beyond traditional hyperscale cloud providers. Organizations developing AI agents, code-generation platforms, and consumer-facing AI applications are increasingly adopting Broadcom’s custom chip solutions.
Broadcom’s custom AI silicon portfolio serves industry titans including Alphabet, Meta, OpenAI, and Anthropic.
During the analyst call, Tan expressed confidence that the company has clear visibility toward AI chip revenue surpassing $100 billion annually by 2027 — a projection that exceeded even the most bullish Street forecasts.
JPMorgan analysts project the company could generate between $12 billion and $15 billion per gigawatt of AI infrastructure by 2027. The firm raised its 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.”
Managing Supply and Profitability
A key investor concern entering the report centered on potential high-bandwidth memory constraints. Tan directly tackled this issue, informing analysts that Broadcom has locked down memory supplies and cutting-edge wafer capacity extending through 2028.
He also dismissed profitability concerns related to increased AI chip rack shipments. Tan indicated the company has optimized manufacturing yields and cost structures to ensure the AI business maintains margins “fairly consistent” with its broader semiconductor portfolio.
The company is approaching 10 gigawatts of deployed capacity across six major customers — a milestone that helped alleviate worries about customer concentration.
Share Buyback and Wall Street Sentiment
Complementing its earnings announcement, Broadcom revealed a new $10 billion stock repurchase authorization, signaling management’s confidence in future growth.
Wall Street maintains a consensus Strong Buy rating on the stock from 30 analysts — comprising 28 Buy ratings and 2 Hold ratings — with an average price target of $449.46.
Broadcom’s impressive performance created positive spillover effects across related technology names. Credo Technology shares surged 10% while Amphenol climbed 4%, as market participants grew more optimistic about copper connectivity solutions versus optical alternatives for AI server infrastructure.
Tan projected AI chip revenue will reach $10.7 billion in the current quarter, indicating the growth trajectory remains intact.
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