Broadcom forecasts robust earnings for 2028, driven by AI partnerships despite a mixed revenue outlook for Q4.
Broadcom Inc. is garnering attention after unveiling upbeat earnings-guidance-after-strong-q2-performance-amid-f-series-recovery/">earnings guidance for fiscal 2028, signaling optimism regarding its future, particularly in the realm of investments-and-their-impact-on-the-global-economy/">artificial intelligence. Despite falling short of revenue expectations for the current quarter, its performance indicates a pivotal shift towards AI-driven growth.
Shares of the technology giant rose slightly during after-hours trading on Wednesday, following their earnings report and a confident outlook that has captivated investors. The semiconductor manufacturer, well-known for its diverse portfolio and client base, aims to expand significantly within AI laboratories.
In its financial statement for the fiscal fourth quarter, Broadcom forecasted revenue of $34.8 billion, marginally below analysts’ projections of $35.03 billion according to LSEG data. Notably, the reported revenue marked an impressive 86% increase from the $15.95 billion reported in the comparable quarter of the previous year.
The company’s net income showed extraordinary growth, tripling to $13.09 billion compared to $4.14 billion a year earlier, translating to earnings per share of $2.68 versus 85 cents. These numbers highlight the substantial momentum Broadcom has achieved amidst the burgeoning AI sector.
As a major player in the semiconductor industry, Broadcom has effectively capitalized on the AI boom, developing custom chips for technology leaders like Google, Meta, and OpenAI. Since late 2022, the company’s stock has surged over sixfold, coinciding with the rise of generative AI technologies.
As of the last trading session, Broadcom’s market capitalization has reached approximately $1.8 trillion. Despite the remarkable growth, the stock's year-to-date performance has not kept pace with broader market indexes, with shares climbing around 6% in 2026 while the S&P 500 index increased by about 12% during the same timeframe.
During the latest earnings call, CEO Hock Tan highlighted Broadcom’s newest developments, including the custom “Jalapeno” chip designed alongside OpenAI. In addition, Apple announced intentions to increase its spending with Broadcom for U.S. chip production, further indicating a strengthening partnership.
Tan disclosed that Broadcom is prepared to accelerate shipments of its Google Ironwood tensor processing units to Anthropic, alongside TPU 8i chips sent to Google. He noted that annual processor deliveries to Google could amount to tens of billions of dollars over the coming years.
"Shipments of Jalapeno for OpenAI will continue, and for Meta, we expect production shipments of their custom MTIA accelerator optimized for inference and recommendation at scale," Tan stated during the conference call.
Broadcom is anticipating Anthropic to deploy 5 gigawatts of TPU 8i chips by 2027, with the potential for an additional 10 gigawatts in the pipeline. OpenAI is also in the process of preparing its second-generation chip, with plans for a third version in collaboration with Broadcom. Tan mentioned a projected deployment of Jalapeno chips reaching 1.3 gigawatts in 2027, with expectations to surpass 5 gigawatts as more advanced versions roll out.
For the 2027 fiscal year, Broadcom expects to double its AI revenue to $115 billion, aiming to double this figure again to $230 billion by fiscal 2028. The company anticipates that its earnings per share will exceed $30, surpassing the consensus estimate of $25.86 for 2028 as collected by LSEG.
Amie Thuener, Broadcom's finance chief, elaborated on the strategic relationships with leading AI labs, stating, "We are empowering two of our most strategic customers, the leading AI labs, to bridge the gap between their current cash flow and the significant upfront investments required for their businesses." The implication is that Broadcom may offer residual value guarantees linked to the labs, indicating a distinctive method of fostering growth with these key clients.
Tan emphasized the rationale behind Broadcom’s investments in enabling AI labs, claiming, "It makes economic sense for Broadcom to invest and enable these guys." This reflects a commitment to not only enhance the company’s technological footprint but also to ensure sustainable long-term relationships in a rapidly evolving sector.
In the semiconductor space, revenue soared over threefold to $16.7 billion, exceeding the $15.2 billion average estimate as per StreetAccount analytics. Meanwhile, revenue from infrastructure software amounted to $8.75 billion, which fell short of the $8.82 billion consensus among analysts surveyed by StreetAccount.
With an eye on the future, Broadcom remains positioned to capitalize on expanding opportunities in the AI sector, buoyed by robust earnings predictions and strategic partnerships with industry giants.
Broadcom's optimistic earnings projections for fiscal 2028 underscore the growing reliance on AI technologies across various sectors. As demand for advanced semiconductor solutions surges amid the AI revolution, the company is set to redefine its trajectory in the tech market. With strong backing from prestigious clients and innovative product developments, the company’s strategies signal a commitment to leadership in the arena of artificial intelligence.
Investors should monitor how Broadcom's continued partnerships with major tech firms influence both its revenue streams and competitive positioning in semiconductor and AI technology markets. The next fiscal years could see significant transformations, with Broadcom poised to adapt and thrive.
What is Broadcom's earnings guidance for fiscal 2028?
Broadcom projects its earnings per share to potentially exceed $30, significantly higher than the consensus estimate of $25.86.
How much revenue is Broadcom expecting from AI initiatives?
Broadcom aims to double its AI revenue to $115 billion in 2027 and reach $230 billion by fiscal 2028.
What are the major products Broadcom is developing for AI?
Key developments include the Jalapeno chip for OpenAI and the TPU 8i units for Google, among other customized AI-driven solutions.