Broadcom (NASDAQ: AVGO) CEO Hock Tan is no stranger to making bold claims, but he has a good track record of being right. His latest projection is particularly audacious: Broadcom will bring in $230 billion in annual AI semiconductor revenue in its fiscal 2028. To hit that would require massive growth from now until then, but can investors trust that forecast?
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » Most of the AI models and applications that have been developed to date have been created and trained on servers built around graphics processing units (GPUs). While these are impressive computing units, they are designed to be general-purpose parallel processors, capable of being programmed for a wide array of calculation-heavy computing tasks. However, when workloads are predictable enough, there are cost and performance gains to be had by running them on specialized narrow-purpose computing units -- application-specific integrated circuits (ASICs).
That's why several major AI companies are using Broadcom's custom AI chip design services to create computing units that are tailored to their workloads. Among Broadcom's ASIC clients are major AI companies like Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), OpenAI, and Anthropic. As these companies and others look to optimize their computing power, they plan to spend a lot more on their own custom AI chips in the future.
Broadcom is seeing this demand, which is why it issued that impressive guidance for $230 billion in AI semiconductor revenue by 2028. For reference, its AI semiconductor revenue was $16.7 billion in the third quarter. Annualized, that's just over $65 billion, so if Broadcom hits its estimate, that would indicate its AI revenue more than tripling in just two years.
In late 2024, Tan predicted that Broadcom's AI revenues would land in the $60 billion to $90 billion range in 2027. While that was regarded as a long-shot forecast at the time, it has turned out to be a major underestimate. The company now projects $115 billion in AI revenue in 2027.
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