Broadcom targets the $3 trillion level as AI revenue guidance tops $100 billion for fiscal 2027
In focus: Broadcom (NASDAQ: AVGO), the eighth-largest company in the world at a $1.9 trillion market cap, and the gap between that figure and the $3 trillion level Microsoft (NASDAQ: MSFT) currently holds at $3.5…
Key takeaways
- Broadcom expects fiscal third-quarter revenue of $29.4 billion, an 84% year-over-year increase, with AI revenue estimated at $16 billion, up more than 200% from a year ago.
- Broadcom's market cap is $1.9 trillion, making it the world's eighth-largest company, and reaching a Nasdaq-100 forward multiple by fiscal 2028 would imply a $686 share price and a market cap above $3 trillion.
- Broadcom has long-term AI chip agreements with six core customers, including Anthropic, Meta Platforms, OpenAI, and Alphabet's Google.
- Broadcom shares rose 28% over the past year while Microsoft stock fell 7% over the same period.
- Mizuho analyst Vijay Rakesh projects Broadcom's Anthropic-related revenue will reach $42 billion in 2027, up from an estimated $21 billion this year.
In focus: Broadcom (NASDAQ: AVGO), the eighth-largest company in the world at a $1.9 trillion market cap, and the gap between that figure and the $3 trillion level Microsoft (NASDAQ: MSFT) currently holds at $3.5 trillion. For the recently concluded fiscal third quarter, Broadcom expects revenue of $29.4 billion, an 84% year-over-year gain, with AI revenue estimated at $16 billion, a more than 200% increase from a year ago. The next confirmable data point is the Q3 earnings release, where the first read on that $16 billion AI revenue estimate becomes available.
Broadcom shares have gained 28% over the past year; Microsoft stock has fallen 7% over the same period. That divergence runs through the AI chip exposure Broadcom has built through long-term agreements with six core customers, including Anthropic, Meta Platforms, OpenAI, and Alphabet's Google.
The numbers
First-half fiscal 2026 revenue came in at $41.5 billion, up 39% year over year. Consensus estimates see fiscal 2026 earnings per share at $11.63, a potential 70% gain from the prior year, with fiscal 2027 expected to grow at a similar rate and fiscal 2028 estimates calling for a further 35% increase to $26.38 per share.
Mizuho analyst Vijay Rakesh projects Broadcom's Anthropic-related revenue will reach $42 billion in 2027, up from an estimated $21 billion this year. The contract behind that figure: Broadcom is on track to deploy 1 gigawatt of AI computing capacity for Anthropic in partnership with Google this year, a number management expects to exceed 3 gigawatts in 2027. Broadcom noted in its June earnings call that these multi-year agreements anchor its growth view through fiscal 2028.
The market size backdrop is relevant context. Globe Market Research projects the custom AI chip space will reach $308 billion in revenue by 2035, a 24% compound annual growth rate over the next decade. China Insights Consultancy estimates the data center optical interconnect market will generate $144 billion by 2030, roughly 10x its 2024 size. Broadcom reportedly holds 70% of the custom AI chip market and competes in optical networking as well.
What to watch
Broadcom trades at 21 times forward earnings, a discount to the Nasdaq-100's 26 times forward. If the stock reaches that index multiple at the close of fiscal 2028, the implied price at the $26.38 consensus EPS figure is $686, a 77% move from current levels and, at that point, a market cap above $3 trillion. The first test of that path is the Q3 earnings print and whether the $16 billion AI revenue estimate holds.