Broadcom predicts $115 billion AI chip sales by 2028
Broadcom on Wednesday projected robust sales of AI chips for the upcoming two years, providing new evidence that the demand for AI infrastructure among major technology firms remains strong, even as investors closely examine the returns on substantial expenditures. Shares of the Palo Alto, California-based company experienced a decline of more than 1% in after-hours trading, managing to recover some of the losses incurred earlier. They have gained about 6% this year, significantly underperforming rivals and the broader semiconductor index, as concerns regarding AI spending and heightened competition continue, including Marvell’s recent custom chip agreement with Google.
Broadcom, whose custom AI chips are utilised by firms such as Meta Platforms, Alphabet’s Google, and OpenAI, stated it now anticipates AI chip revenue of approximately $115 billion in the fiscal year concluding in October 2027, an increase from its previous estimate of over $100 billion. The company anticipates that this figure will double to approximately $230 billion in fiscal 2028. The outlook underscores the expansion of AI expenditure beyond the expensive processors of Nvidia, creating advantages for suppliers like Broadcom, which offers both custom chips and the networking elements that integrate AI systems. As major technology firms accelerate their efforts to establish AI infrastructure, Broadcom’s bookings for AI chips exceeded $30 billion in the last quarter alone.
CEO Hock Tan informed analysts that Broadcom has secured sufficient supply to sustain the elevated projections for the upcoming year, as consumer demand continues to escalate. He stated that the company has clarity regarding further AI infrastructure deployments extending through 2028, which encompasses over 10 gigawatts for Anthropic, more than 5 GW for OpenAI, and 3 GW for Meta. “That is committed capacity, not aspiration, and it closes most of the gap to what the market wanted,” said Patrick Moorhead.
Fourth-quarter revenue is projected to be around $34.8 billion, which is below the analysts’ average estimate of $35.03 billion, according to data collected by LSEG. Sales of AI chips experienced a remarkable increase, more than tripling to $16.7 billion in the third quarter, which contributed to Broadcom’s total revenue of $29.59 billion, exceeding expectations of $29.36 billion. Adjusted profit reached $3.32 per share, exceeding estimates of $3.24.
