Broadcom’s CEO recently eased investor concerns about the demand for AI chips, revealing a strong second-quarter forecast that sent its shares surging 14% in extended trading.
The chipmaker expects to generate $14.90 billion in revenue this quarter, beating estimates of $14.76 billion. Broadcom is seeing high demand for its custom AI chips from cloud computing companies looking for alternatives to Nvidia’s costly processors.
CEO Hock Tan stated that the company anticipates $4.4 billion in second-quarter revenue from its AI semiconductors as hyperscale customers invest in custom AI chips for data centers. This growth is attributed to large tech companies moving away from off-the-shelf chips to in-house processors as computing needs for AI tasks become more complex and personalized.
Broadcom has gained four new hyperscale customers who are working with the company to create their own custom chips, separate from its existing three that use its processors. These customers are expected to contribute significantly to Broadcom’s revenue opportunity of $60 billion to $90 billion in 2027.
Analysts believe Broadcom is well-positioned compared to its peers due to its diversified exposure in the AI market and multiple AI ASIC customers. The company has also been evaluating Intel’s advanced manufacturing process, known as 18A, which it hopes will give it a competitive edge.
In first-quarter earnings, Broadcom reported $14.92 billion in revenue, beating estimates of $14.61 billion. Its AI revenue surged more than 77% to $4.1 billion on strong adoption of its custom-made accelerators. The company’s infrastructure software segment also saw significant growth, with revenue rising over 47% to $6.70 billion.
Source: https://www.reuters.com/technology/broadcom-forecasts-second-quarter-revenue-above-estimates-shares-rise-7-2025-03-06