Broadcom Raises AI Revenue Outlook After 221% Chip Surge

Broadcom raised its long-term AI revenue outlook after AI semiconductor revenue jumped 221% in the fiscal third quarter ended Aug. 2, driven by mass shipments of Ironwood TPU v7 chips and the start of TPU v8i inference shipments to Alphabet and Anthropic.

Broadcom projects AI revenue of $115 billion in fiscal 2027 and $230 billion in fiscal 2028. The company reported beginning mass shipments of Ironwood TPU v7 to Alphabet and Anthropic during the quarter and said it began shipping Alphabet’s TPU v8i inference chips. Broadcom is responsible for the v8i inference version while MediaTek handles the v8t training version and Broadcom said it brought the v8i to market faster despite a later start.

Broadcom provided customer deployment plans underlying its outlook. Anthropic plans to deploy 5 gigawatts of TPU v8i capacity in fiscal 2027 and 10 gigawatts in fiscal 2028. Alphabet is expected to generate tens of billions of dollars in annual TPU revenue in coming years. OpenAI plans to deploy 5 gigawatts of its Jalapeño chip and a successor in 2028. Broadcom expects to supply Meta Platforms with 3 gigawatts of custom MTIA chips through 2028.

For the fiscal third quarter, Broadcom reported revenue of $29.6 billion, an 86% increase from a year earlier. Adjusted earnings per share rose to $3.32, up 96% and slightly above analyst expectations. Semiconductor solutions revenue climbed 127% to $20.8 billion, while non-AI semiconductor revenue increased 5% to $4.2 billion. Infrastructure software revenue grew 29% to $8.8 billion.

Margins shifted as the revenue mix changed. Overall gross margin fell 210 basis points to 75%. Semiconductor gross margin was 76%, compared with 84% for infrastructure software.

For the fiscal fourth quarter, Broadcom guided revenue to about $34.8 billion, a 93% year-over-year increase, and forecast AI revenue of roughly $21.6 billion, a 236% rise. The company expects a gross margin of about 73% for the quarter. Broadcom said demand for its fiscal 2027 AI revenue target is already above the $115 billion projection but that supply capacity needs improvement; it expects sufficient supply to meet its fiscal 2028 outlook and forecasts adjusted EPS of more than $30 that year.

Some investors have expressed skepticism about Broadcom’s near-term valuation and its ability to scale supply. Analyst Bruno Montoya Amador described market skepticism as excessive, noting Broadcom’s planned multi-gigawatt deployments with Anthropic and OpenAI and projecting operating margins could remain above 68% despite pressure on gross margins.

Valuation measures cited by market participants include forward earnings multiples. One estimate placed the stock at about 11.5 times Broadcom’s fiscal 2028 guidance, while broader commentary referenced a multiple below 21 times forward earnings.

Broadcom’s results show a shift toward AI-focused semiconductor sales alongside continued growth in infrastructure software. The company highlighted the need to expand chip production to match customers’ multi-gigawatt deployment plans and said supply capacity is a key factor in meeting its revenue targets.