Broadcom has significantly raised its forecast for artificial intelligence chip sales, predicting $115 billion in revenue for the fiscal year ending October 2027, an increase from its previous estimate of over $100 billion. The company further expects this figure to double to approximately $230 billion in fiscal year 2028. This optimistic outlook signals Broadcom's intent to challenge Nvidia's lead in the lucrative AI chip market, with Bloomberg Intelligence analyst Matt Bloxham providing details on this development.
This robust forecast comes as Broadcom also anticipates exceeding earnings of $30 per share in fiscal year 2028, surpassing Wall Street expectations. The company's custom AI chips are currently utilized by major tech players like Meta Platforms, Alphabet's Google, and OpenAI. Broadcom's CEO, Hock Tan, informed analysts that the company has secured sufficient supply to meet the increased forecast for the upcoming year, with customer demand continuing to rise.
Broadcom's third-quarter AI chip sales more than tripled to $16.7 billion, contributing to a total revenue of $29.59 billion, which beat estimates of $29.36 billion. Adjusted profit reached $3.32 per share, outperforming estimates of $3.24. Despite these strong financial results and positive forecasts, Broadcom's shares were down over 1% in extended trading, having gained only about 6% this year, underperforming rivals and the broader semiconductor index due to ongoing AI spending concerns and increased competition, including Marvell's recent custom chip deal with Google. The company expects fourth-quarter revenue to be around $34.8 billion, slightly below analysts' average estimate of $35.03 billion.
Broadcom's revised outlook highlights a broader trend in AI spending, extending beyond Nvidia's expensive processors to benefit suppliers like Broadcom, which provide both custom chips and essential networking components for AI systems. Bookings for Broadcom's AI chips alone topped $30 billion last quarter. Patrick Moorhead, CEO of analyst firm Moor Insights & Strategy, noted that this represents "committed capacity, not aspiration," addressing market expectations.
In related news, Ajit Manocha, president and CEO of SEMI, expressed a belief in a semiconductor "super cycle" that will continue to grow, driven by AI demand in this decade and quantum computing in the next. He emphasized that memory companies are aggressively investing in capacity, with Micron Technology reporting a 345.72% year-over-year revenue increase to $41.46 billion in fiscal Q3, and predicting continued tightness in DRAM and NAND supply beyond calendar year 2027.
