Broadcom Sees AI Chip Revenue Reaching $230 Billion by Fiscal 2028, Boosting Hopes of Gains Against Nvidia
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Broadcom’s projection for a surge in artificial intelligence chip sales over the next two years is fueling expectations that it can expand its foothold in an AI semiconductor market dominated by Nvidia.
Chief Executive Officer Hock Tan said on an earnings conference call that AI chip revenue would double to about $115 billion in fiscal 2027 and then climb to $230 billion in fiscal 2028, Bloomberg reported on Sept. 2. He also projected fiscal 2028 earnings per share of more than $30, above market expectations.
Growth in Broadcom’s AI business has been driven largely by customers seeking to reduce their dependence on Nvidia products by securing their own AI semiconductors. Google, OpenAI and Meta are expanding development of customized chips to complement Nvidia’s AI processors.
Anthropic and OpenAI are emerging as major customers. Tan said he expects Anthropic to surpass Google in 2027 to become the largest customer for Broadcom’s custom AI chip business. He projected OpenAI would rank second. “Four of our six customers will grow at an enormous scale,” Tan said.
Rising data-center spending by large technology companies is also supporting performance. Capital expenditures by the five largest hyperscalers rose about 40% to more than $700 billion. Bloomberg Intelligence said the investment is improving demand visibility for custom semiconductors and networking products.
Broadcom’s fiscal third-quarter results also topped expectations. Revenue for the quarter ended Sept. 2 rose 86% from a year earlier to $29.6 billion, exceeding the market forecast of about $29.5 billion. Adjusted earnings per share came in at $3.32, above the expected $3.23.
AI semiconductor revenue totaled $16.7 billion, beating the market estimate of $15.9 billion. That included sales of custom accelerators and networking semiconductors used to develop and run AI models. Broadcom said fourth-quarter AI chip revenue would reach $21.7 billion.
Still, the company’s forecast for total fourth-quarter revenue fell slightly short of market expectations. Broadcom projected fourth-quarter revenue of $34.8 billion through October, compared with the average analyst estimate of $35.1 billion. Some forecasts were above $36 billion.
Competition in the market for custom AI chips is also intensifying. Marvell Technology signed a contract last month to support Google’s custom semiconductor development. Broadcom has been working with Google to develop tensor processing units, or TPUs, used in AI data centers.
