CEO Hock Tan of Broadcom made an aggressive earnings forecast during the company's earnings call on Wednesday. He expects the company's AI chip revenue to "significantly exceed $10 billion" by 2027. This optimistic outlook directly ignited market sentiment, pushing Broadcom's stock up more than 5% in after-hours trading.

Hock Tan said demand for custom chips (ASICs) from major clients is showing a strong recovery, and Broadcom has secured the supply chain support needed to achieve this goal. Financial data showed that Broadcom's AI business performed well in the first quarter, with revenue doubling year-over-year to $8.4 billion, driving the company's total sales up 29% to $19.3 billion. The company expects AI semiconductor revenue to rise further to $10.2 billion this quarter.

In explaining the growth drivers, Hock Tan noted that customized AI deployment has entered the "next phase." He detailed the capacity support from major clients as the basis for revenue estimates, including Google (3 GW), Anthropic (3 GW), Meta (at least 2 GW), and OpenAI (1 GW). Although he acknowledged that the revenue per GW can fluctuate, the overall estimate aligns with actual performance.

Industry analysts pointed out that although Broadcom's current AI growth is mainly driven by chip business, its product lines also cover multiple key areas, such as digital signal processors, data processing units, and network switches. As major clients increasingly shift to self-developed custom chips, Broadcom's position as a foundational technology partner is becoming increasingly solid.

Key Takeaways

  • 💰 Trillion-Dollar Revenue Goal: Broadcom expects its annual AI chip revenue to break through the $100 billion mark by 2027.

  • 📈 Exceeding Expectations: AI revenue in the first quarter grew more than double year-over-year, and it is expected to surpass $10 billion this quarter.

  • 🤝 Major Client Ties: The growth is primarily driven by demand for customized AI chips from giants like Google, Meta, Anthropic, and OpenAI.

  • 🚀 Supply Chain Assurance: The company has already locked in supply chain resources to meet the production challenges brought by the accelerated deployment of customized AI.