Key Takeaways
- First-quarter AI revenue doubled year-over-year, reaching $8.4 billion on strong demand for custom AI accelerators and networking solutions.
- CEO Hock Tan forecasts AI chip revenue surpassing $100 billion annually by 2027.
- Adjusted earnings per share reached $2.05, exceeding analyst expectations of $2.03, while revenue of $19.31 billion beat projections.
- Second-quarter revenue guidance of approximately $22 billion significantly surpassed Wall Street’s $20.5 billion estimate.
- Management announced a fresh $10 billion share repurchase program and confirmed secured supply agreements extending through 2028.
Broadcom shares advanced approximately 5% during Thursday trading following the semiconductor giant’s robust first-quarter performance and CEO Hock Tan’s optimistic outlook for sustained AI chip demand through 2027.
The company delivered adjusted earnings of $2.05 per share, topping the consensus estimate of $2.03. Total revenue reached $19.31 billion, representing 29% year-over-year growth and exceeding Wall Street’s $19.18 billion projection.
The forward guidance particularly impressed investors. Management expects second-quarter revenue around $22 billion — substantially higher than the $20.5 billion analysts had anticipated.
AI-related revenue captured significant attention, more than doubling to $8.4 billion during the quarter. Custom AI accelerators and networking chips drove this explosive growth.
Tan emphasized that demand now extends beyond traditional hyperscale cloud providers. Organizations developing AI agents, code-generation platforms, and consumer-facing AI applications are increasingly adopting Broadcom’s custom chip solutions.
The company’s AI semiconductor partnerships include technology leaders such as Alphabet, Meta, OpenAI, and Anthropic.
During the analyst call, Tan shared the company possesses clear visibility toward AI chip revenue surpassing $100 billion per year by 2027 — a projection exceeding even the most bullish Wall Street forecasts.
JPMorgan analysts calculate the company can achieve between $12 billion and $15 billion per gigawatt of AI infrastructure capacity by 2027. Their updated AI revenue projections conservatively reach $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.”
Manufacturing Capacity and Profitability
nHeading into earnings, high-bandwidth memory availability raised questions among investors. Tan directly addressed these concerns, confirming Broadcom has locked in memory supplies and advanced wafer production capacity through 2028.
Regarding profitability concerns around AI chip rack shipments, Tan explained the company has optimized manufacturing yields and costs sufficiently. The AI segment now maintains profitability margins consistent with other semiconductor product lines.
The company approaches 10 gigawatts of deployed capacity across six major customers — helping alleviate investor worries about customer concentration.
Capital Return and Wall Street Outlook
Accompanying the earnings release, Broadcom unveiled a new $10 billion stock repurchase authorization, reinforcing management’s confidence in future performance.
Wall Street maintains a consensus Strong Buy rating on the stock from 30 analysts — comprising 28 Buy ratings and 2 Hold ratings — with an average price target of $449.46.
The strong quarterly results created positive momentum for related companies. Credo Technology shares surged 10% while Amphenol gained 4%, reflecting investor optimism around copper connectivity solutions for AI server infrastructure.
Tan indicated current-quarter AI chip revenue should reach $10.7 billion, signaling continued strong demand momentum.
