Broadcom made a shocking prediction during its earnings call, stating that by 2027, the company's market opportunity in the artificial intelligence (AI) chip sector could reach between $60 billion and $90 billion. This forecast indicates that the AI boom in the semiconductor industry is surpassing industry giant Nvidia.
Broadcom's CEO, Hock Tan, mentioned that three major hyperscale cloud customers plan to deploy over one million XPU clusters in the coming years.
Image Source Note: Image generated by AI, licensed by Midjourney
Broadcom's XPU is a customized accelerator for its customers, and recently this product has played a significant role in Broadcom's semiconductor revenue. In the most recent quarter, Broadcom's semiconductor revenue hit a record high of $30.1 billion, with AI-related revenue reaching $12.2 billion, a 220% year-over-year increase. This growth is primarily attributed to the sales of Broadcom's AI XPU and Ethernet network chips.
However, despite Broadcom's strong growth in this area, some analysts have pointed out that customers may consider designing their own faster networking chips, or their spending plans may change. Currently, cloud companies are still maintaining high spending on AI data center construction, but if the return on investment does not meet expectations, it could affect future spending decisions.
Nevertheless, investors are confident in Broadcom's AI prospects. During the call, Tan also mentioned that Broadcom has been selected by two new hyperscale customers and is conducting advanced development for their next-generation AI applications. Following this news, Broadcom's stock price rose by over 14% in after-hours trading. If this momentum continues in regular trading, the company's stock could reach a new 52-week high.
Like Nvidia, Broadcom is leveraging the AI wave for growth, albeit on a slightly smaller scale. According to Tan, if Broadcom successfully taps into the anticipated market revenue, its opportunities could be close to Nvidia's scale. However, he also cautioned analysts that the outlook for 2027 will depend on progress in collaboration with customers and may experience quarterly fluctuations.
Currently, Broadcom's investors are actively seizing future opportunities but need to be aware that conditions may change over the next few years, as 2027 is still some time away.
Key Takeaways:
🌟 Broadcom predicts that the AI chip market could reach $60 billion to $90 billion by 2027, showcasing the industry's enormous potential.
📈 Broadcom's AI revenue achieved a 220% growth in the most recent quarter, mainly driven by sales of its XPU and Ethernet chips.
🤔 Analysts warn that customers may consider designing their own chips, and changes in return on investment could affect future spending.
