Key Highlights
- Broadcom shares climbed approximately 7% in early trading following its ambitious AI chip revenue forecast exceeding $100 billion by 2027.
- First-quarter fiscal 2026 sales totaled $19.3 billion, marking a 29% increase from the prior year and surpassing analyst projections.
- The company generated $8.4 billion in AI semiconductor sales during Q1, with expectations of $10.7 billion for the upcoming quarter.
- Management issued Q2 revenue outlook of $22 billion, significantly above the $20.56 billion Wall Street consensus.
- Truist maintained its Buy recommendation with a $510 target following the strong quarterly performance.
Shares of Broadcom climbed approximately 7% in pre-market hours Thursday following the semiconductor manufacturer’s announcement that it expects AI chip sales to exceed $100 billion by 2027, positioning itself as a formidable competitor to Nvidia in the artificial intelligence market.
The technology firm disclosed first-quarter fiscal 2026 sales of $19.31 billion, representing a 29% year-over-year increase. Results narrowly surpassed the Street consensus of $19.26 billion, with semiconductor operations outperforming expectations by 0.9%.
Revenue from AI semiconductors totaled $8.4 billion during the period, modestly exceeding Truist’s projection of $8.2 billion. The software division represented the lone area of weakness, falling short of consensus estimates by 2.8%.
The company posted earnings per share of $2.05, topping the unguided Street estimate of $2.03. EBITDA reached $13.13 billion, representing 68% of total revenues—2.9% higher than analyst projections and 100 basis points above the company’s own forecast.
Operating margin stood at 66.4%, exceeding the consensus forecast of 65.7% by 70 basis points.
Major AI Infrastructure Agreements Announced
Management revealed plans to supply 3 gigawatts worth of tensor processing units to Anthropic during 2027. Additionally, the company will manufacture and deliver OpenAI’s inaugural custom AI processor—totaling more than 1 gigawatt—within the same timeframe.
These production volumes position Broadcom at a competitive scale comparable to recent artificial intelligence chip agreements secured by Nvidia and AMD.
Second-quarter revenue guidance reached $22 billion, approximately 7.3% higher than Street expectations of $20.5 billion. AI chip sales for the April quarter are forecast at $10.7 billion—11.5% above Truist’s model of $9.6 billion.
Broadcom additionally unveiled a new stock buyback authorization of up to $10 billion extending through year-end.
Wall Street Response
Truist Securities maintained its Buy rating and $510 price objective following the quarterly report. The broader Wall Street consensus remains at a strong buy, with price targets spanning from $335 to $530.
Jefferies analysts noted that AI spending concerns will persist, but emphasized 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 AI demand sustainability.
UBS retained its Buy rating, highlighting favorable valuation metrics in the semiconductor division.
Despite the pre-market surge, AVGO shares remain down approximately 8.3% year-to-date. Nvidia, in comparison, has declined roughly 2% during the same timeframe.
Broadcom recently commenced shipments of what it describes as the industry’s inaugural 2nm custom compute processor on its 3.5D platform. The firm also introduced the BroadPeak chip, designed for next-generation 5G and 6G network infrastructure, delivering up to 40% power efficiency gains.
Inventory levels rose approximately 9 days sequentially to around 60 days, exceeding the typical seasonal decrease of roughly 1 day—a metric analysts are expected to monitor closely in subsequent quarters.
