Broadcom sees over $100 billion in AI chip sales by 2027 on robust custom chip demand | Reuters

Broadcom, a leading chip designer, has made significant waves in the semiconductor industry by projecting its artificial intelligence (AI) chip revenue to surpass $100 billion by 2027. This ambitious forecast highlights the surging demand for custom chips, particularly in a market currently dominated by Nvidia. Following the announcement, Broadcom's share price experienced a nearly 5% increase in after-hours trading, reflecting investor confidence in the company's growth trajectory. The company also unveiled a new share repurchase program worth up to $10 billion, indicating a strong financial position and commitment to returning value to shareholders. The CEO of Broadcom, Hock Tan, emphasized the improved visibility into future revenues, stating that the company expects to generate approximately $10.7 billion in AI chip revenue for the upcoming quarter alone. This projection is significantly above analysts' expectations, which averaged around $20.56 billion for the second quarter. Broadcom's strategy involves collaborating with major tech firms such as Google and OpenAI to develop custom processors, including tensor processing units (TPUs), which are critical for AI applications. Broadcom's anticipated delivery of 1 gigawatt's worth of TPUs for AI startup Anthropic in 2026, with projections rising to 3 gigawatts in 2027, underscores the escalating demand for AI infrastructure. Furthermore, the company aims to ship its first AI chip for OpenAI by 2027, marking a pivotal moment in Broadcom's product offerings. This move positions Broadcom as a formidable competitor to established players like Nvidia and AMD, who have recently disclosed substantial sales figures for their AI chips. Despite a slowdown in its infrastructure software segment, which grew by only 1% in the first quarter, Broadcom's overall revenue rose by 29% to $19.31 billion, surpassing market expectations. The company's AI revenue more than doubled to $8.4 billion, driven by the increasing demand for custom AI accelerators and networking solutions. As major tech companies are projected to invest at least $630 billion in AI infrastructure this year, Broadcom stands to benefit significantly from this trend, solidifying its position in the rapidly evolving AI chip market.