Broadcom projects AI revenue will double to $115 billion in fiscal 2027, then double again to $230 billion in fiscal 2028.
The stock looks cheap at forward P/E of 11.5 times fiscal 2028 guidance.
The company is diversifying AI chip customers beyond Alphabet.
What happened
Broadcom forecasts AI revenue of $115 billion in fiscal 2027, up from earlier guidance of $100 billion, and $230 billion in fiscal 2028. Fiscal Q3 AI semiconductor revenue grew 221% year over year, with mass shipments of Ironwood TPU v7 chips to Alphabet and Anthropic, and initial shipments of Alphabet's next-gen TPU 8i.
Why it matters
The fiscal 2028 estimate tops Citigroup's $180 billion projection. Broadcom expects Anthropic to become its largest customer next fiscal year, planning 5 gigawatts of TPU 8i in FY2027 and 10 gigawatts in FY2028. OpenAI is projected to be its second-largest chip customer, with 5 gigawatts of its Jalapeño chip and successor expected in 2028. The stock trades at a forward P/E of 11.5 times fiscal 2028 guidance, which the article calls incredibly cheap.
What to watch
Broadcom said fiscal 2027 AI revenue could be higher if supply improves; demand is currently above its $115 billion projection. For fiscal Q4, it forecasts revenue of $34.8 billion (up 93%) and AI revenue of $21.6 billion (up 236%).
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Summaries like this, in your inbox every morning.
Broadcom's recent fiscal Q3 results show AI as the dominant growth driver, with AI semiconductor revenue up 221% year over year. The company is expanding beyond its reliance on Alphabet, with Anthropic set to become its largest customer next fiscal year and OpenAI projected to be its second-largest. Meta Platforms will also receive 3 gigawatts of custom MTIA chips through 2028. This diversification, alongside surging revenue, supports the company's bullish outlook. The stock appears undervalued relative to its growth prospects, but the article notes that fiscal 2027 revenue could be even higher if supply improves, indicating potential constraints on near-term growth.
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