SEATTLE: Broadcom Inc predicts a surge in artificial intelligence (AI) chip sales over the next two years, helping renew optimism that the company can challenge Nvidia Corp’s dominance in the market.
AI chip revenue will double to about US$115bil in fiscal 2027 and soar to US$230bil the following year, chief executive officer Hock Tan said during a conference call.
The company also is on track to top earnings of US$30 a share in fiscal 2028, outpacing Wall Street estimates.
The shares rebounded from an earlier decline after Tan gave the guidance. It was up about 1% in late trading in New York.
Broadcom’s custom AI semiconductor business is thriving as companies like Alphabet Inc’s Google, OpenAI and Meta Platforms Inc look for ways to supplement their Nvidia-made AI chips with additional supply and variation.
Chatbot makers Anthropic PBC and OpenAI, which are racing to expand their AI infrastructure, have emerged as especially important clients for Broadcom.
Anthropic is expected to become the biggest customer for Broadcom’s custom chips in 2027, displacing Google. Tan sees OpenAI becoming the second-biggest client for that business.
“We have six customers, four of them are just simply going to be huge,” Tan added.
The rapid expansion of data centres also has helped lift sales of Broadcom’s networking products.
Capital budgets for the top five hyperscalers, a group that includes the biggest operators of data centres, have climbed about 40% to more than US$700bil, “strengthening demand visibility for custom silicon and networking”, Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said in a note.
The longer-term outlook cheered investors, who were less impressed with Broadcom’s forecast for the fourth quarter.
Revenue will be US$34.8bil in that period, which runs through October, the company said.
Though analysts predicted US$35.1bil on average, some estimates topped US$36bil, according to data compiled by Bloomberg.
The stock had been up 6.1% this year through the close, a performance that trailed the rallies enjoyed by many chip peers in 2026.
AI chip revenue alone will generate US$21.7bil in the fourth quarter, Broadcom said.
That narrowly topped the average estimate, with some projections well exceeding US$22bil.
In the fiscal third quarter, which ended Aug 2, sales rose 86% to US$29.6bil.
Analysts had projected about US$29.5bil on average. Earnings climbed to US$3.32 a share, excluding some items. That compared with an estimate of US$3.23.
AI semiconductor revenue was US$16.7bil in the period, compared with an average estimate of US$15.9bil.
That category includes custom-built accelerators, the chips used to develop and run AI models, as well as networking semiconductors.
Broadcom has been riding high on custom AI chip demand, both by signing deals and leading a charge to find a way to help companies like Anthropic pay for pricey semiconductor purchases.
Tan has set up financing vehicles with Apollo Global Management Inc and Blackstone Inc to help Anthropic afford the Google chips that Broadcom helped develop.
The financing partnership, which is meant to back more than 20 gigawatts of computing power, will require hundreds of billions of dollars. That level of capacity would roughly equal the output of 20 nuclear plants.
But there also have been signs of mounting competition. Last month, Marvell Technology Inc announced a deal to help make custom semiconductors for Google.
Broadcom and Google have long worked together to develop that company’s tensor processing units, which are chips used in AI data centres. — Bloomberg
