broadcomThe company’s shares rose about 5% on Thursday as CEO Hock Tan touted strong demand for the company’s chips amid the artificial intelligence boom.
He told analysts on Wednesday that he expects AI chip revenue to be “well over $100 billion” in 2027 as demand for custom silicon designs increases.
That far exceeds the bullish expectations of many Wall Street analysts, who are hoping for further upside potential after Tan said the company was approaching 10 gigawatts of capacity among its six customers.
JPMorgan analysts estimate the company will reach $12 billion to $15 billion in revenue per gigawatt by 2027, and “conservatively” raised the company’s AI revenue forecast to more than $120 billion.
The company’s “leadership in AI networking and custom silicon enables it to minimize inference costs for hyperscaler customers, delivering continued cost reductions at the same pace as market leader Nvidia,” Goldman Sachs analysts wrote.
The comments came alongside Broadcom’s better-than-expected quarterly results, in which AI revenue more than doubled due to demand for AI accelerators and networking.
Chipmakers have been grappling with a shortage of high-bandwidth memory in recent months as AI demand causes supply to surge. However, Tan told analysts that the company has secured supplies of memory and cutting-edge wafers until 2028.
Mr. Tan was successful in persuading investors about Broadcom’s sustainable growth trajectory, allaying concerns about the company’s profitability and whether Broadcom’s profits would come under pressure as it ships more racks equipped with AI chips. By comparison, AI chipmaker Nvidia’s explosive report last month wasn’t enough to convince investors.
“We have been able to secure yields and costs to the point where the model in the AI space is almost in line with the model in other semiconductor businesses,” Tan told analysts.
A growing number of hyperscalers are making their own chips, raising concerns that Broadcom could be squeezed out of the market. However, Mr Tan spoke about the difficulty of competing with such huge players. Nvidia It should benefit the company “for many years to come.”
Large language model makers “can’t afford to have enough powerful chips,” he said. “We need the best chips because we’re competing with other LLM players and, most importantly, with Nvidia, who never let their guard down.”
Broadcom’s strong performance benefited creed and Amphenol This is based on the view that customers are choosing copper connections, the chipmaker’s core business segment, over optical technology to connect to AI servers. Stock prices rose 10% and 4%, respectively.
lumen and reasonableCompanies that make new optical technologies each fell more than 4%.
—CNBC’s Jordan Noveto and Katie Tarasoff contributed reporting
Broadcom stock price chart from the beginning of the year to the present.
