Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) shares fell 3.3% Thursday afternoon despite the company issuing a bullish long-term forecast for its artificial intelligence business, projecting AI revenue of $230 billion in fiscal 2028.
The company also raised its fiscal 2027 AI revenue outlook to $115 billion, up from a prior guide of more than $100 billion, and expressed confidence in earnings per share of $30 or more for that year.
Anthropic and OpenAI are set to become Broadcom's largest customers, according to Jefferies, with AI networking revenue expected to grow at a similar pace to XPU compute revenue.
Jefferies called the fiscal 2028 AI revenue figure an unexpected upside surprise given Street estimates of $26 EPS, and noted Anthropic's deployment is set to grow from 1 gigawatt this year to 5 gigawatts in fiscal 2027 and 10 gigawatts more in 2028, while OpenAI expands from 1.3 gigawatts to more than 5 gigawatts over the same window. Together the two account for roughly 15 of the 20 gigawatts of demand outlined for fiscal 2028.
Google continues growing under a new long-term agreement but is set to fall to Broadcom's third-largest customer, Jefferies said, with management cautioning that land, power and shell readiness will gate deployment timing.
For the quarter, Broadcom reported revenue of $29.6 billion, up 33% sequentially and above Street estimates. Semiconductor Solutions revenue reached $20.8 billion, with AI revenue within the segment at $16.7 billion, up 54% sequentially. Infrastructure Software revenue was $8.7 billion. Consolidated gross margin came in at 75.0% and operating margin at 67.9%, both ahead of Street estimates. Earnings per share came in at $3.32, above the $3.21 consensus.
BofA raised its estimates while lowering its price objective, citing increasing exposure to frontier AI labs. The firm said it is less comfortable with rising exposure to Anthropic and OpenAI, both of which have other silicon options, and flagged Google's declining gigawatt allocation as puzzling given MediaTek's rising influence.
Baird said Broadcom is guiding for two consecutive years of AI revenue doubling and is well positioned amid an industry-wide shift toward inferencing performance. The firm said Anthropic is on track to become Broadcom's largest TPU customer in 2027, with deployment doubling from 5 gigawatts to 10 gigawatts in 2028.