TMTPOST -- Broadcom Inc. shares gained around 9.8% on Wednesday as the big beneficiary of the generative artificial intelligence (AI) boom saw strong revenue growth throughout the coming five years.
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Broadcom CEO Hock Tan at the Goldman Sachs Communicopia + Technology Conference 2025 on Tuesday outlined the chipmaker』s strategic focus on AI compute solutions, instead of developing AI algorithms. One of the highlights Tan revealed is his aggressive AI revenue forecast.
Broadcom did indicate 60% of growth rate for the fiscal year 2026, the same as the previous year, and 「it look like we』re accelerating beyond that in 2026」, said Tan. Tan recently signed up for an extension of his contract as CEO to 2030 and will get incentives if he can help Broardcom crush its targets for AI targets during the extension. He at the event Tuesday showed confidence in stellar momentum of the company』s AI business.
To show how strong the demand for compute amid the race toward generative AI, superintelligence, Tan noted Broadcome』s annual AI revenue would exceed $120 billion in 2030, representing a sixfold increase from the $20 billion in 2025. When asked if Broadcom is 100% focused on the AI opportunity at the moment, Tan predicted the company』s AI revenue will surpass a combination of both non-AI and software in one or two years.
Broadcom previously has said it had three existing major customers, and Tan earlier this year hinted at four new potential customers who were deeply engaged with the company to develop their own custom chips. He on Tuesday stressed his company targets a narrow group of about seven key players focused on creating large language models (LLMs). 「Beyond that, we do not see those as our market at all,「 he said.
Broadcom last week reported quarterly performances suggesting significant AI-driven demand, and Tan disclosed a potential customer was turned into a qualified one with a firm order in the company』s third quarter of its fiscal year 2025 ended August 3.
Broadcom』s revenue for the August quarter advanced 22% year-over-year (YoY) to $15.95 billion, topping Wall Street analysts』 estimated $15.84 billion. On non-GAAP basis, the diluted earnings per share (EPS) came in at $1.69 with a 36.3% YoY surge, better than expected $1.66. The guidance also beat Wall Street anticipation. Broadcom now expects revenue of $17.4 billion for the fourth fiscal quarter, compared with analysts』 projection.
Tan on an earnings conference last Thursday said Broadcom had secured $10 billion in orders for its custom AI chips, which it calls XPUs, from a fourth customer.「One of these prospects released production orders to Broadcom, and we have accordingly characterized them as a qualified customer for XPUs,」 Tan said. He added the orders will ship next year.
Given the major order from the new customer who has 「immediate and pretty substantial demand」 , Broadcom upgraded its forecast for AI revenue next year, according to Tan. He told investors the chip designer』s outlook for fiscal year 2026 will improve 「significantly」 from what it had indicated last quarter, and a growth rate will accelerate in a 「fairly material」way. Tan previously had said 2026 would witness the AI revenue grow at the same rate as the current year, namely, a rate between 50% and 60%.
While Tan didn』t namethe new customer, the Financial Times following Broadcom』s financial results reported that OpenAI was the latest customer. The client was identified as OpenAI, Bloomberg echoed, citing people with knowledge of the matter. According to the source, Broadcom』s custom chip program is intended to ease supply constraints on Nvidia Corporatioin』s AI chips, and to allows OpenAI to develop processors tailored for its models.
Broadcom is also working on releasing an AI chip using a next-generation manufacturing technology for one of its customers, called a 「2 nanometer」 node process, which JPMorgan analyst Harlan Sur noted Friday is 「an industry first and well ahead of」 Nvidia and other competitors. William Blair analyst Sebastien Naji said Broadcom』s latest chip designs are 「cementing」 the company as 「the leading alternative」 to Nvidia.
