Broadcom's stock rose after forecasting its AI chip sales will exceed $100 billion in 2027, fueled by major tech companies planning massive infrastructure spending. The company has secured significant deals to supply AI chips to Anthropic and OpenAI, bringing its order volume closer to rivals Nvidia and AMD.
Despite this optimism, investor concerns persist over whether massive AI investments will yield adequate returns, contributing to recent declines in tech stocks, including Broadcom's. Broadcom provided strong near-term financial guidance, projecting Q2 revenue and AI chip sales above estimates, and announced a $10 billion share buyback program.
Main topics: Broadcom's AI chip sales forecast and major deals; massive AI infrastructure spending by Big Tech; investor concerns about returns on AI investments; Broadcom's financial performance and stock repurchase.
Broadcom shares jumped about 7% before the bell âon Thursday after âthe company said it expects artificial intelligence chip âsales to top $100 billion in 2027, as it pushes into a market long ruled by Nvidia.
Big Tech firms such as Alphabet, âMicrosoft , Amazon â and â Meta are expected to spend more than $600 billion to build AI infrastructure this year, boosting demand for chips, servers, storage and networking equipment.
Broadcom âexpects to deliver 3 gigawatts worth of tensor processing units for AI work to Anthropic in 2027, âand plans to ship OpenAI's first AI â chip, delivering âover 1 GW, in the same year.
The âvolumes âput Broadcom closer to the scale of â recent AI chip deals by Nvidia and AMD.
Investors âare, however, questioning whether heavy spending on AI âwill generate sufficient returns to justify the lofty valuations, leading to sharp declines in the world's most valuable technology stocks.
Broadcom's stock is down about 8.3% so far this year, while Nvidia is down about â2%.
"The AI spend overhang will still linger, but Broadcom made a strong case for their âAI revenue âto outgrow the â market," said analysts at Jefferies.
Broadcom expects second-quarter revenue to be about $22 billion, above analysts' average estimate of $20.56 billion, according to data âcompiled by LSEG. It projects AI chip revenue of $10.7 billion in the quarter.
The company also announced a new share repurchase program of up to $10 billion through the end of the year.
Big Tech firms such as Alphabet, âMicrosoft , Amazon â and â Meta are expected to spend more than $600 billion to build AI infrastructure this year, boosting demand for chips, servers, storage and networking equipment.
Broadcom âexpects to deliver 3 gigawatts worth of tensor processing units for AI work to Anthropic in 2027, âand plans to ship OpenAI's first AI â chip, delivering âover 1 GW, in the same year.
The âvolumes âput Broadcom closer to the scale of â recent AI chip deals by Nvidia and AMD.
Investors âare, however, questioning whether heavy spending on AI âwill generate sufficient returns to justify the lofty valuations, leading to sharp declines in the world's most valuable technology stocks.
Broadcom's stock is down about 8.3% so far this year, while Nvidia is down about â2%.
"The AI spend overhang will still linger, but Broadcom made a strong case for their âAI revenue âto outgrow the â market," said analysts at Jefferies.
Broadcom expects second-quarter revenue to be about $22 billion, above analysts' average estimate of $20.56 billion, according to data âcompiled by LSEG. It projects AI chip revenue of $10.7 billion in the quarter.
The company also announced a new share repurchase program of up to $10 billion through the end of the year.
Meridiano
