Broadcom's AI Chip Sales Triple, but Stock Falls Amid Revenue Guidance Concerns
Broadcom (NASDAQ:AVGO) reported a significant increase in its AI chip revenue for the quarter, reaching $16.7 billion—a year-over-year jump of 221%. Management also raised its fiscal 2027 AI revenue outlook to approximately $115 billion and projected $230 billion by fiscal 2028. Despite these strong results, the stock fell slightly post-earnings due to a Q4 total revenue guidance that came in near but not above consensus expectations. The company's custom AI accelerators (XPUs), co-designed with hyperscalers for specific model families, accounted for 73% of its AI revenue. These chips offer performance advantages over general-purpose GPUs like those from NVIDIA (NASDAQ:NVDA). However, the market reacted negatively to a weaker-than-expected Q4 guidance, overshadowing broader optimism about Broadcom's long-term AI growth trajectory. Broadcom’s strategy involves deep collaboration with hyperscalers such as Anthropic and OpenAI for large-scale deployments. The company also highlighted its leadership in networking technology like Tomahawk 6 switches used by major cloud providers.
