Key Highlights
- AI-related revenue at Broadcom surged past $8.4 billion in Q1, more than doubling from the prior year on strong custom accelerator and networking chip sales.
- Chief Executive Hock Tan forecasted AI semiconductor revenue will surpass $100 billion annually by 2027.
- First quarter adjusted earnings per share reached $2.05, topping analyst expectations of $2.03, while revenue of $19.31 billion exceeded projections.
- The company issued Q2 revenue guidance of approximately $22 billion, significantly above Wall Street’s ~$20.5 billion estimate.
- Management unveiled a fresh $10 billion share repurchase program and confirmed secured component supply extending through 2028.
Shares of Broadcom advanced approximately 5% during Thursday’s session following the semiconductor giant’s impressive Q1 financial report and Chief Executive Hock Tan’s optimistic outlook for sustained AI chip demand through 2027.
The stock’s upward movement followed Broadcom’s disclosure of adjusted earnings reaching $2.05 per share, narrowly exceeding the analyst consensus of $2.03. Total revenue reached $19.31 billion, representing a 29% year-over-year increase and surpassing Wall Street’s $19.18 billion projection.
The most striking element was the company’s forward guidance. Management expects second quarter revenue to approach $22 billion — substantially higher than the $20.5 billion analysts had anticipated.
Artificial intelligence revenue emerged as the standout metric. The segment more than doubled to reach $8.4 billion during the quarter, propelled by robust demand for customized AI accelerators and high-performance networking semiconductors.
According to Tan, the customer base has expanded beyond traditional hyperscale cloud providers. Organizations developing AI agents, automated code generation systems, and consumer-facing AI applications are increasingly adopting Broadcom’s tailored chip solutions.
The company’s AI semiconductor portfolio serves several technology industry leaders, including Alphabet, Meta, OpenAI, and Anthropic.
During the analyst call, Tan revealed the company possesses clear “line of sight” to annual AI chip revenue surpassing $100 billion by 2027 — a projection that exceeded even the most bullish Wall Street forecasts.
JPMorgan analysts calculate the company could generate between $12 billion and $15 billion per gigawatt of AI infrastructure by 2027. They raised their 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.”
Supply Chain Security and Profitability
A key investor concern entering the earnings release centered on potential high-bandwidth memory constraints. Tan directly addressed this issue, informing analysts that Broadcom has locked in memory supplies and cutting-edge wafer capacity through 2028.
He also dismissed profitability concerns related to increased AI chip rack shipments. Tan explained that the company has optimized production yields and cost structures to ensure the AI division’s business model remains “fairly consistent” with its broader semiconductor operations.
The company is approaching 10 gigawatts of deployed capacity across six major customers — a metric that helped alleviate investor anxiety regarding customer concentration risks.
Share Repurchase Program and Wall Street Sentiment
Alongside the quarterly results, Broadcom revealed a new $10 billion stock buyback authorization, providing additional support for investor confidence.
The stock currently maintains a consensus Strong Buy rating from 30 Wall Street analysts — comprising 28 Buy ratings and 2 Hold ratings — with an average price target of $449.46.
Broadcom’s robust performance created positive spillover effects for related companies. Credo Technology shares surged 10% and Amphenol climbed 4%, as market participants anticipated increased adoption of copper-based connectivity solutions over optical technologies for AI server infrastructure.
Tan indicated that AI chip revenue for the current quarter should reach $10.7 billion, signaling that growth momentum remains intact.
