Chip design company Broadcom forecast on Wednesday that its artificial intelligence chip revenue will exceed $100 billion by 2027, indicating that demand for custom artificial intelligence chips is surging in a market dominated by Nvidia. The company's shares rose more than 4% in after-hours trading after the company announced a new stock buyback program of up to $10 billion that will run through the end of the year.
Big tech companies such as Alphabet, Microsoft, Amazon and Meta are expected to spend at least $630 billion this year to build artificial intelligence infrastructure, which will boost demand for chips, servers, storage and network equipment provided by companies such as Broadcom.
"Our outlook for 2027 has been significantly improved. In fact, we are now confident that we will achieve artificial intelligence chip revenue exceeding US$100 billion in 2027," Broadcom CEO Chen Fuyang said on the earnings call.
The company expects second-quarter revenue of about $22 billion, above analysts' average estimate of $20.56 billion. The company expects AI chip revenue to be $10.7 billion in the quarter.
Chen Fuyang said that Broadcom is expected to deliver 1 GW of TPUs to artificial intelligence startup Anthropic in 2026, and demand will increase to 3 GW in 2027. Broadcom aims to deliver OpenAI's first AI chip in 2027 and deliver more than 1 gigawatt of chips.
The number of chips Broadcom disclosed with major customers on Wednesday shows that the scale of the orders it has signed is similar to that of large artificial intelligence chip companies such as Nvidia (which disclosed last week that it sold 5 gigawatts of chips to OpenAI) and AMD (which has signed 6 gigawatts of orders with OpenAI and Meta each).
Another source of revenue for Broadcom is Meta Platforms. Chen Fuyang said that there were previous reports that Meta's AI chip business was slowing down. This is one of the measures taken by the company to design more customized chips independently and reduce its reliance on external suppliers. These reports are not true.
“Meta’s custom accelerator MTIA roadmap is progressing smoothly,” Chen Fuyang said, referring to Meta’s custom chips. “We have started shipping now.