- Broadcom reported Q3 earnings with $16.7 billion in AI revenue and a $21.7 billion Q4 outlook.
- CEO Hock Tan said Broadcom has secured supply to double AI revenue to $115 billion in 2027, with demand exceeding the outlook.
- Anthropic is expected to become Broadcom's largest XPU customer in 2027, while OpenAI could deploy more than 5 gigawatts of Broadcom's next-generation Jalapeno XPU in 2028.
- Despite the strong outlook, Broadcom's Q4 revenue forecast, which implies 93% growth, came in below Wall Street's expectations, sending AVGO shares 1.3% lower in overnight trading.
- Analyst Patrick Moorhead said Broadcom delivered a "strong, but not flawless" third quarter, highlighting its AI execution and broader AI infrastructure advantage, but cautioned that results "do not prove broad NVIDIA displacement."
- Broadcom has secured supplies for wafers, substrates and memory needed to meet its 2027 and 2028 AI revenue targets, and plans to deploy its Singapore substrate facility in fiscal 2027 to ease a key supply bottleneck.
- Moorhead noted unresolved risks including software, customer concentration, Google multisourcing, bookings conversion, AI networking mix, first-generation XPU yields, and the fiscal 2027 AI bridge.
Broadcom's ambitious forecast predicts AI semiconductor revenue will reach $115 billion in fiscal 2027 and $230 billion in fiscal 2028, driven by major clients like OpenAI and Anthropic. CEO Hock Tan noted, "In 2028… we have line of sight for fiscal 2028 AI semiconductor revenue growth to again double to $230 billion."236
In Q3, Broadcom's AI chip revenue surged to $16.7 billion, contributing to an 86% increase in total revenue, which reached $29.59 billion. This performance exceeded Wall Street's expectations of $29.36 billion.1
However, the company's Q4 forecast fell short, projecting 93% growth but disappointing investors, leading to a 1.3% drop in AVGO shares. Despite this, Broadcom has secured supplies for the necessary components to meet its ambitious revenue targets for 2027 and 2028.4
Analyst Patrick Moorhead remarked that while Broadcom's performance was strong, it was not flawless, emphasizing the importance of AI execution over modest revenue beats. He stated, "The key takeaway was its AI execution rather than the modest revenue beat." Moorhead also pointed out that Broadcom's broader AI infrastructure advantage includes custom XPU co-design and other technologies, although he cautioned about potential challenges in software and customer concentration.57
As Broadcom prepares to deploy its Singapore substrate facility in fiscal 2027, it aims to alleviate supply bottlenecks and capitalize on the growing AI market.
“CEO Hock Tan said Broadcom has secured supply to double AI revenue to $115 billion in 2027, with demand exceeding the outlook. Analyst Patrick Moorhead cautioned that results 'do not prove broad NVIDIA displacement,' citing unresolved risks like customer concentration and Google multisourcing.”
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