Broadcom posts modest Q1 sales and earnings beats
Its CEO forecasting over $100 billion in AI chip sales after the report, however, got investors excited.
Broadcom is rising in premarket trading, up 6% at 4 a.m. ET, after CEO Hock Tan revealed that he sees the company selling “in excess of $100 billion” worth of AI chips in 2027 on its earnings call last night.
Promisingly for investors, Tan also confirmed that the chip designer has “secured the supply chain required to achieve” the blockbuster target, as demand for custom chips continues to rise.
Initially, shares had been little changed in postmarket trading after AVGO reported Q1 results that modestly exceeded analysts’ expectations, along with strong Q2 guidance, and it announced a new $10 billion share buyback program.
The Q1 results:
And the Q2 guidance:
“Q1 AI revenue of $8.4 billion grew 106% year-over-year, above our forecast, driven by robust demand for custom AI accelerators and AI networking,” President and CEO Hock Tan said. “Our AI revenue growth is accelerating, and we expect AI semiconductor revenue to be $10.7 billion in Q2.”
$10.7 billion in AI sales for the current quarter matches the highest estimate from the 26 analysts polled by Bloomberg.
“We believe Broadcom is seeing even higher TPU demand (FY26 and FY27) than its supply chain capabilities (continued upside to existing backlog), and the team is working to unlock more supply over the next few months,” JPMorgan analyst Harlan Sur wrote ahead of this report, calling the company his top pick among semiconductor stocks.
Broadcom was riding high during its fiscal first quarter on a wave of Gemini-inspired optimism, but was de-rated dramatically after releasing its Q4 results. Despite posting impressive results and a solid outlook, the custom chip behemoth failed to announce any new major customer wins, and analysts fretted that its recent contract growth was lower-margin work.
