Broadcom Sees AI Chip Revenue Reaching $230 Billion by Fiscal 2028, Raising Hopes for Nvidia Challenge

Broadcom’s forecast for a surge in artificial intelligence chip revenue over the next two years is boosting expectations that the company can gain ground in an AI semiconductor market dominated by Nvidia.

Hock Tan, Broadcom’s chief executive officer, said on an earnings conference call that AI chip revenue will double to about $115 billion in fiscal 2027 and then rise to $230 billion in fiscal 2028, Bloomberg reported on September 2. He also said fiscal 2028 earnings per share will top $30, exceeding market expectations.

Broadcom’s AI growth has been driven largely by customers trying to reduce their dependence on Nvidia by developing their own AI semiconductors. Google, OpenAI and Meta are expanding work on custom chips meant to complement Nvidia’s AI processors.

Anthropic and OpenAI are emerging as major customers. Tan said Anthropic will overtake Google in 2027 to become the biggest customer for Broadcom’s custom AI chip business, with OpenAI ranking second. “Four of our six customers will grow to enormous scale,” he said.

Rising data-center spending by large technology companies is also supporting performance. Capital expenditures by the five biggest hyperscalers climbed about 40% to more than $700 billion. Bloomberg Intelligence said the spending is improving visibility for demand for custom semiconductors and networking products.

Broadcom’s third-quarter results also topped market expectations. Revenue for the quarter ended August 2 rose 86% from a year earlier to $29.6 billion, beating the market estimate of about $29.5 billion. Adjusted earnings per share came to $3.32, above the expected $3.23.

AI semiconductor revenue was $16.7 billion, ahead of the market forecast of $15.9 billion. That figure includes sales of custom accelerators and networking semiconductors used to develop and run AI models. The company said fourth-quarter AI chip revenue will reach $21.7 billion.

Still, Broadcom’s overall fourth-quarter revenue outlook came in slightly below market expectations. The company forecast fourth-quarter revenue through October at $34.8 billion, compared with the average estimate of $35.1 billion. Some projections were above $36 billion.

Competition in the custom AI chip market is also intensifying. Marvell Technology signed a deal last month to support Google’s development of custom semiconductors. Broadcom has been working with Google to develop tensor processing units, or TPUs, used in AI data centers.