Broadcom’s AI figures are not as gigantic as Nvidia’s, but it has built a serious business beyond its old radio-frequency kit for the Fruity Cargo Cult Apple.
It said it has “line of sight” on AI chip sales topping $100 billion in 2027, against total annual revenue of just under $70 billion.
Broadcom is finding the market hard to please, much like Nvidia. Shares popped after hours after the fiscal first-quarter numbers, but that came after the stock had lost more than 20 per cent since the previous results.
Nvidia has slid more than six per cent since its strong quarterly report last week. Microsoft, Amazon.com, and Google’s parent, Alphabet, are spending hundreds of billions on AI buildouts, yet their shares are in the red this year.
That sour mood is bigger than any one company, but Broadcom is trying to punch through it. AI chip revenue more than doubled year-on-year to $8.4 billion in the latest quarter, and it expects $10.7 billion in the current quarter.
That $10.7 billion target sits 15 per cent ahead of the cocaine nose jobs of Wall Street expectations. The AI chip game is naturally concentrated because only a handful of giants can afford to fill warehouses with servers.
Some investors have been twitchy about Broadcom’s heavy reliance on Google, which uses it to help design and build TPU chips for its AI push. Broadcom pushed back, saying it now has six customers for what it calls XPUs, custom processors tuned for specific workloads that can be more efficient than Nvidia’s GPUs.
Broadcom chief executive officer Hock Tan said Meta Platforms’ in-house chip effort is “alive and well.” The line was aimed at reports suggesting the programme was wobbling.
Tan said Broadcom has already locked up the supply of key components through 2028, and near-term demand drove inventory up 30 per cent in three months.
That is the biggest inventory jump in at least six years, according to S&P Global Market Intelligence. While the AI engine is roaring, Broadcom still has to juggle the rest of the house.
That includes the chips it supplies to Apple and the infrastructure software operation it bulked up through deals, with software now about 40 per cent of overall revenue. Software revenue grew just one per cent year on year to about $6.8 billion in the latest quarter, right as investors have been battering software stocks on AI disruption fears.
Tan called VMware “the essential software layer in data centres.”
The market is still treating software like a dead weight strapped to an AI rocket, and Broadcom keeps insisting the rope is part of the safety gear.
