Broadcom(AVGO.US) Gains Wall Street's Favor After Earnings: Strong Outlook for AI Computing Power Demand, Revenue Expected to Break $100 Billion, Possibly Still "Too Conservative"

Bloomberg News has learned that after Broadcom (AVGO.US) announced its earnings, Wall Street analysts praised this semiconductor and software giant for its “strong” outlook for 2027, indicating the company will continue to invest heavily in artificial intelligence.

Jefferies analyst Blayne Curtis wrote in a client report: “We expect the AI market to exceed $100 billion in revenue by fiscal 2027, which may be conservative, as Broadcom expects to provide 10GW of computing capacity, including over 1GW for its sixth announced customer, OpenAI. The overspending on AI will likely continue, but Broadcom has demonstrated that its AI revenue will surpass market averages and maintain steady growth through 2028.” Curtis rates Broadcom as a “Buy” with a target price of $500.

Curtis further noted that during a conference call, Broadcom management stated that their demand for 2027 has reached 10GW, including the 1GW for OpenAI and 3GW for Anthropic mentioned earlier. Given the company’s expectation that AI chip revenue will exceed $100 billion in 2027, Curtis believes this may still be a conservative estimate.

He speculated: “Our calculations show that revenue in 2025 will be $13 billion per GW, slightly below $18 billion in 2026, and we expect it to reach $20-25 billion per GW in 2027, which means AI revenue could actually surpass $200 billion.”

Curtis added: “Overall, the debate for Broadcom (and Nvidia) still centers on whether cloud capital expenditure growth will be sustainable in 2028. This conference call did not directly answer that question, but it helps us foresee that earnings per share in fiscal 2027 could reach $25-30 (above our previous forecast of $20). It’s hard to imagine these computing stocks maintaining such low valuations.”

RBC Capital Markets’ Srini Pajjuri was also impressed by Broadcom’s outlook for 2027, but noted some issues may be beyond Broadcom’s control.

In a report, Pajjuri wrote: “Broadcom has a solid track record of execution, and we have little reason to doubt management’s insights. Meanwhile, the expected 10GW capacity in fiscal 2027 (about 3GW in fiscal 2026) suggests rapid capacity ramp-up, which could face power/data center constraints. Additionally, key customers Anthropic/META/OpenAI and Nvidia/AMD have signed supply agreements with equity incentives, which may take priority over Broadcom’s capacity ramp-up.” Pajjuri maintained a “Neutral” rating aligned with the industry and raised the target stock price from $340 to $360 after earnings.

Citi analyst Atif Malik reaffirmed his “Buy” rating after the earnings release, as concerns over margins or competition have been alleviated. Malik wrote in a client report: “Management stated that shipments of Anthropic racks will not pressure margins and confirmed OpenAI as its sixth AI customer. The company also emphasized a significant improvement in outlook, with AI revenue expected to reach $100 billion in fiscal 2027. Therefore, we have raised our EPS estimates for fiscal 2026 and 2027 (including SBC) by 14% and 17%, respectively, to $10.15 and $15.4.”