So, Broadcom (AVGO 0.54%). They’re quietly becoming the infrastructure backbone of everything AI, which, let’s be honest, is a little like being the stage crew for a Beyoncé concert. No one sees you, but if you mess up, everyone notices. Their latest earnings report? Basically, they’re printing money faster than a Kardashian launching a new product line. The stock took a little dip earlier this year, which, in market terms, is like getting a slightly chipped manicure – annoying, but hardly a crisis.
Let’s unpack this, because “AI revenue growth” is the corporate equivalent of saying “We’re disrupting things!” Everyone’s disrupting something these days. But Broadcom isn’t just talking; they’re actually shipping chips. And a lot of them.
AI Momentum: Not Just Hype
Their AI revenue is up 106% year over year. One hundred and six percent! That’s the kind of number that makes analysts start wearing sunglasses indoors. The custom AI ASIC business is booming – up 140%. Which, in layman’s terms, means they’re making specialized chips for companies who want their AI to be…special. And apparently, a lot of companies do. AI networking is up 60%, which means all this AI needs a highway system, and Broadcom is building it. They’re predicting even bigger jumps in Q2, thanks to their Tomahawk Ethernet switch. It sounds like something out of a Marvel movie, but it’s actually the plumbing of the internet.
They’re forecasting $14.8 billion in AI revenue for Q2. That’s…a lot of zeros. And they think their five biggest custom AI chip customers could generate over $100 billion in revenue just from chips in 2027. That’s enough to buy a small country. Or, you know, a really nice yacht.
Overall revenue jumped 29% to $19.31 billion, and earnings per share climbed 28% to $2.05, beating expectations. LSEG had their number, but Broadcom delivered. Adjusted EBITDA is up 30% to $13.1 billion. Basically, they’re really good at what they do, and it’s showing up on the bottom line.
Semiconductor solutions revenue is up 52%, but the non-AI stuff is lagging. It’s up only 4%. Which just proves my point: everyone wants AI, and Broadcom is supplying the goods. Infrastructure software is up 1%, thanks to a 13% bump in VMware revenue. VMware. Remember them? They’re still around. It’s like finding a Betamax player in the attic.
Gross margins dipped slightly to 77%, down from 79.1% a year ago. Investors are worried about the lower margins on the ASIC business. But honestly, in this market, who isn’t worried about something? They’re holding up reasonably well, and in the grand scheme of things, it’s not a dealbreaker.
Looking ahead, they’re guiding for $22 billion in revenue for Q2, with semiconductor revenue expected to climb 76% to $14.8 billion. Infrastructure software is projected to rise 9% to $7.2 billion. And they announced a $10 billion share repurchase program. Because when you’re already printing money, you might as well buy back some stock.
Is Broadcom a Buy? (Or Just a Really Good Infrastructure Play?)
Look, let’s be real. Broadcom isn’t going to give you the overnight, meme-stock excitement of, say, a company that makes dogecoin-themed water bottles. They’re not flashy. They’re not trying to be. But they are building the foundation for the AI revolution, and that’s a pretty good place to be. They’re the unglamorous heroes of the tech world.
The $100 billion AI chip revenue forecast for 2027 is significant. And the surge in networking revenue is a good sign. ASICs are becoming more cost-effective, especially for inference, and with the inference market projected to be bigger than training, Broadcom is well-positioned for the long haul.
The stock currently trades at a forward P/E ratio of about 32 times this year’s estimates, but only around 22.5 times the fiscal 2027 consensus. With growth set to accelerate, that makes it a buy. It’s not a crazy, get-rich-quick scheme, but it’s a solid, dependable investment. And in this market, that’s almost revolutionary.
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2026-03-08 00:54