In a bid to calm investor concerns over AI chip demand, Broadcom CEO Hock Tan delivered an optimistic second-quarter forecast on Thursday, sending the company’s stock soaring. Despite a 6% drop in Broadcom shares (AVGO.O) earlier in the day, the stock surged 14% in extended trading after the earnings announcement, reassuring investors about the continued demand for AI semiconductors.
The chipmaker expects second-quarter revenue of approximately $14.90 billion, slightly surpassing market estimates of $14.76 billion, according to LSEG data. This positive outlook provided a stark contrast to the previous day’s weak forecast from Marvell Technology (MRVL.O), which triggered concerns about a slowdown in AI chip demand.
Broadcom continues to see robust demand for custom AI chips, particularly from cloud computing giants looking for alternatives to the expensive processors designed by Nvidia (NVDA.O). As these hyperscalers expand their AI infrastructure, they are increasingly turning to customized AI accelerators to reduce costs and optimize performance.
For the second quarter, Broadcom anticipates AI semiconductor revenue of $4.4 billion, fueled by major hyperscale customers investing in data center chips. The company already supplies custom AI chips to three major tech firms and has now revealed that four more hyperscalers are “deeply engaged” in developing their own AI processors using Broadcom’s technology.
🔹 These four new customers are not yet included in Broadcom’s projected revenue opportunity of $60 billion to $90 billion by 2027, indicating significant potential upside for the company’s AI chip business.