Broadcom’s AI goal and current valuation

Broadcom shares are trading well below their 52-week high even though the company has kept its target of taking AI semiconductor revenue above $100 billion in fiscal 2027. With the stock at around $370, its 52-week peak was $495, putting it about 25% below the high.

Broadcom CEO Hock Tan said during the June 3 earnings call that the company expects about $56 billion in AI semiconductor revenue this fiscal year, while the target of more than $100 billion for 2027 remains unchanged. AI semiconductor revenue reached $10.8 billion in the fiscal second quarter ended May 3, a 143% increase from a year earlier.

Two key risks the market is watching

Investors are focused on the timing of revenue growth and customer concentration. The company plans to ship about 10 gigawatts of AI processing capacity in fiscal 2027, but much of that growth is expected in the second half of the year, raising concerns that revenue could be recognized later and any delays could push part of the story into 2028.

Valuation has also pulled back noticeably. At its 52-week high, the stock was priced at about 25 times the adjusted earnings analysts expected for fiscal 2027; today, it trades at roughly 19 times that estimate.

Contracts, orders and visibility

Management says the 2027 target is supported by multiyear deals and a strong order pipeline. In the second quarter, Broadcom shipped $10.8 billion of AI semiconductors and received more than $30 billion in bookings, with visibility extending into 2028, the company said.

  • There is a long-term agreement with Alphabet covering multiple generations of TPU chips.
  • Anthropic has planned an additional 5 gigawatts of TPU-based computing capacity starting in 2027.
  • OpenAI has committed to a 1.3-gigawatt deployment next year.
  • Meta Platforms has an ongoing custom-chip partnership for 3 gigawatts through the end of 2028.
  • Broadcom also received purchase orders worth a total of $6 billion from two additional customers.

Why the next earnings report matters

The market is now focused on fiscal third-quarter results due on September 2. Broadcom had projected $16 billion in AI semiconductor revenue for the third quarter, and fourth-quarter guidance will be one of the first concrete signals on whether the company is still on track to hit its $56 billion annual target.

The latest sign of customer concentration came on August 19. Marvell Technology shares fell about 5% after the company announced an expanded custom-chip deal with Google, although Broadcom had already disclosed a long-term Alphabet agreement in April covering multiple generations of TPUs.