Broadcom's stock dropped 15% after earnings beat, but the chip giant projects $100 billion in AI chip revenue for fiscal 2027

Broadcom reported Q2 fiscal 2026 revenue of $22.19 billion (up 48% year over year), beating estimates by $70 million, with adjusted EPS of $2.44 (up 54%). For Q3, the company projects revenue of $29.4 billion (up 83% year over year) but guided $16 billion in AI chip revenue, missing the consensus estimate of $17.2 billion.

Unlike Nvidia's general-purpose data center GPUs, Broadcom designs custom ASICs (application-specific integrated circuits—chips optimized for specific tasks) for hyperscalers like Meta and Google, allowing them to process AI tasks more cost-efficiently and reduce long-term dependence on Nvidia.

Broadcom's AI chip sales reached $20 billion in fiscal 2025 (up 65%), representing 31% of total revenue. The company forecasts $100 billion in AI chip revenue in fiscal 2027, which would account for 59% of projected $169 billion in total revenue. From fiscal 2025 to fiscal 2028, analysts expect revenue and adjusted EBITDA to grow at CAGRs of 52% and 53%, respectively, while the stock trades at 19 times next year's adjusted EBITDA.