Quick Summary
- AI revenue at Broadcom surged past $8.4 billion in Q1, more than doubling year-over-year thanks to custom accelerators and networking solutions.
- CEO Hock Tan forecasts AI chip revenue will surpass $100 billion annually by 2027.
- First quarter adjusted EPS reached $2.05, exceeding analyst expectations of $2.03; total revenue of $19.31 billion beat projections.
- Management guided Q2 revenue to approximately $22 billion, significantly above Wall Street’s ~$20.5 billion consensus.
- A fresh $10 billion share repurchase program was unveiled, with supply agreements locked through 2028.
Shares of Broadcom rallied approximately 5% Thursday following the chip giant’s impressive Q1 performance and CEO Hock Tan’s optimistic outlook on sustained AI chip demand stretching to 2027 and beyond.
The semiconductor company delivered adjusted earnings of $2.05 per share, narrowly topping consensus expectations of $2.03. Total revenue reached $19.31 billion, marking a 29% year-over-year increase and surpassing Wall Street’s $19.18 billion projection.
The forward guidance proved even more impressive. Management expects approximately $22 billion in revenue for Q2 — substantially higher than the $20.5 billion analysts had anticipated.
Artificial intelligence revenue stole the spotlight. The segment more than doubled to reach $8.4 billion during the quarter, powered by robust demand for specialized AI accelerators and networking solutions.
According to Tan, demand is diversifying beyond legacy hyperscalers. Organizations developing AI agents, code-generation platforms, and consumer-facing AI applications are increasingly adopting Broadcom’s customized chip solutions.
The company’s AI silicon partnerships include technology leaders such as Alphabet, Meta, OpenAI, and Anthropic.
During the analyst call, Tan revealed the firm has clear visibility toward AI chip revenue surpassing $100 billion per year by 2027 — a projection that exceeded even the most bullish Street estimates.
JPMorgan’s research team estimates the company could generate $12 billion to $15 billion for every gigawatt of AI infrastructure by 2027. The investment bank raised its AI revenue projections 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.”
Addressing Supply and Profitability Concerns
Investors had expressed concerns about potential high-bandwidth memory constraints ahead of the earnings release. Tan tackled this issue head-on, confirming Broadcom has locked in memory supply and advanced wafer capacity extending through 2028.
The CEO also dismissed profitability concerns related to increased AI chip rack shipments. He emphasized that production yields and cost structures have reached a level where the AI segment’s business model aligns closely with the company’s 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.
Share Repurchase and Wall Street Sentiment
Broadcom complemented its earnings announcement with a new $10 billion stock buyback authorization, reinforcing management’s confidence in future prospects.
Wall Street maintains a consensus Strong Buy rating on the stock from 30 analysts — featuring 28 Buy ratings and 2 Hold ratings — with an average price target of $449.46.
The positive results created ripple effects across the sector. Credo Technology shares surged 10% while Amphenol gained 4%, as market participants grew optimistic about copper-based connectivity solutions versus optical technology for AI server infrastructure.
Tan indicated AI chip revenue should reach $10.7 billion in the current quarter, signaling continued strong momentum for the business.
