Key facts
- Broadcom forecasts AI chip revenue of $115 billion for fiscal year 2027, up from over $100 billion.
- The company projects AI chip revenue to reach approximately $230 billion in fiscal year 2028.
- Broadcom's AI chip sales more than tripled in the third quarter, reaching $16.7 billion.
- Total third-quarter revenue was $29.59 billion, exceeding analyst expectations.
- Fourth-quarter revenue is forecast at $34.8 billion, slightly below estimates.
Broadcom has significantly boosted its outlook for AI chip sales, signaling continued robust demand from major technology firms for AI infrastructure. The company now anticipates AI chip revenue to reach approximately $115 billion in the fiscal year ending October 2027, an increase from its previous projection of over $100 billion. This figure is expected to nearly double to roughly $230 billion by fiscal year 2028.
These updated forecasts underscore the sustained appetite for AI hardware, extending beyond specialized processors to include networking components that are crucial for connecting AI systems. Broadcom's custom AI chips are utilized by industry giants such as Meta Platforms, Alphabet's Google, and OpenAI. In the third quarter, Broadcom's AI chip sales more than tripled, contributing to a total revenue of $29.59 billion, which surpassed analyst expectations.
Despite the strong AI chip performance, Broadcom's overall fourth-quarter revenue is projected to be around $34.8 billion, falling slightly short of the consensus estimate of $35.03 billion. CEO Hock Tan reassured analysts that the company has secured sufficient supply to meet the elevated demand through 2028, with committed capacity for key clients including Anthropic, OpenAI, and Meta.
Shares of Broadcom saw a slight decline in extended trading, recouping some earlier losses. The company's stock has gained about 6% year-to-date, underperforming rivals and the broader semiconductor index amidst ongoing concerns about AI spending returns and increased competition, including custom chip deals from competitors like Marvell with Google.