Broadcom raises AI chip forecast to $115B after record quarter

Broadcom ↗ 0.21% reported record fiscal third-quarter results on Wednesday, posting consolidated revenue of $29.6 billion — up 86% year-over-year — and raised its AI chip revenue forecast for fiscal 2027 to roughly $115 billion. But a fourth-quarter revenue guide of approximately $34.8 billion that trailed Wall Street expectations sent shares lower in after-hours trading.

Record Quarter, Cautious Reaction

Adjusted earnings per share came in at $3.32, topping the analyst consensus of $3.22 to $3.24, while revenue of $29.59 billion exceeded estimates near $29.25 billion. AI semiconductor revenue surged 221% year-over-year to $16.7 billion, accounting for more than half of total sales. Free cash flow reached $13.7 billion, or 46% of revenue.mexc+3

Despite the strong results, Broadcom's Nasdaq ↘ 1.85% -listed shares fell in extended trading. The fourth-quarter revenue guidance of $34.8 billion came in below buy-side expectations that had clustered around $35.0 billion to $35.2 billion, according to Reuters. Gross margins also compressed sequentially to 75%, with fourth-quarter guidance pointing toward 73%, reflecting the growing share of lower-margin custom AI hardware in the revenue mix.investors+2

The $115 Billion Outlook

CEO Hock Tan raised the company's fiscal 2027 AI chip revenue target to approximately $115 billion, up from a prior forecast of more than $100 billion, and outlined a path to roughly $230 billion in fiscal 2028. Management said the projections are backed by secured wafer allocations from TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 2.85% and binding customer purchase commitments.enterpriseai.economictimes.indiatimes+2

Broadcom also disclosed for the first time that it captures between $20 billion and $30 billion in silicon and networking content per gigawatt of customer data-center capacity — a metric that ties its revenue directly to the power-hungry buildout of AI infrastructure.mexc

Anthropic and the Custom Chip Boom

A key driver of the multi-year outlook is Anthropic, which signed a deal earlier this year with Broadcom and Alphabet's ↘ 1.11% Google for roughly 3.5 gigawatts of TPU-based compute capacity starting in 2027. On the earnings call, Tan said Anthropic is scaling from 1 gigawatt in 2026 toward 5 gigawatts in 2027, with visibility toward 10 gigawatts in 2028 — a trajectory that could make the AI lab Broadcom's largest customer.cnbc+2

The results underscore a widening AI chip market beyond Nvidia ↗ 0.84%, as hyperscalers and frontier AI labs increasingly invest in custom silicon. But for now, investors appear focused on the narrower question of whether Broadcom can close the gap between its ambitious multi-year roadmap and the quarterly precision that a trillion-dollar valuation demands.electronics.economictimes.indiatimes+1