Broadcom Inc. (AVGO.US) receives positive outlook from Wall Street after earnings report: Strong prospects for AI computing power demand, revenue surpassing $100 billion expectations may still be "too conservative"

After Broadcom Inc. (AVGO.US) announced its performance, Wall Street analysts praised the semiconductor and software giant's "strong" outlook for 2027, indicating that the company will continue to invest heavily in the field of artificial intelligence. Jefferies Financial Group Inc. analyst Blayne Curtis wrote in a report to clients, "It is expected that the artificial intelligence market size will exceed $100 billion in the 2027 fiscal year, which may be too conservative, as Broadcom Inc. is expected to provide 10GW of computing power, including over 1GW of computing power to its already announced customer OpenAI. The overspending trend in artificial intelligence will continue, but Broadcom Inc. has proven that its artificial intelligence revenue will exceed the market average and maintain continuous growth until 2028." Curtis has a "buy" rating on Broadcom Inc. with a target price of $500. Curtis further pointed out that Broadcom Inc. management stated during the conference call that they have already received demand for 10GW in the 2027 fiscal year, including the previously mentioned 1GW from OpenAI and 3GW from Anthropic. Given that the company expects artificial intelligence chip revenue in 2027 to exceed $100 billion, Curtis believes this may still be a conservative estimate. Curtis speculated, "Our calculations show that revenue will be $13 billion/GW in 2025, slightly lower in 2026 at around $18 billion, and we expect it to reach $20-25 billion/GW by 2027, which means that artificial intelligence revenue could actually exceed $200 billion." Curtis added, "Overall, the debate focus for Broadcom Inc. (as well as NVIDIA Corporation) remains whether cloud capital spending growth is sustainable in 2028. This conference call did not directly answer this question, but it helps us anticipate that earnings per share in the 2027 fiscal year will reach $25-30 (higher than our previous forecast of $20), and we find it difficult to imagine that these computing stocks can maintain such low valuations." RBC Capital Markets' Srini Pajjuri was also impressed with Broadcom Inc.'s outlook for 2027, but he noted that there may be some issues that Broadcom Inc. cannot control. Pajjuri wrote in a report, "Broadcom Inc. has a solid track record of execution, and we have almost no reason to question management's insight. At the same time, the expected capacity of 10GW in the 2027 fiscal year (around 3GW in the 2026 fiscal year) means that capacity ramp-up speed is fast and may encounter limitations in terms of power/data centers. In addition, major customers Anthropic/META/OpenAI have signed stock incentive supply agreements with NVIDIA Corporation/AMD, which may take precedence over Broadcom Inc.'s capacity ramp-up." Pajjuri maintains a "neutral" rating on Broadcom Inc. and raised the target stock price from $340 to $360 after the performance announcement. Citigroup analyst Atif Malik reiterated his "buy" rating after the performance announcement, as any concerns about profit margins or competition have been alleviated. Malik wrote in a report to clients, "Management stated that shipments of Anthropic racks will not pressure profit margins and confirmed OpenAI as their sixth artificial intelligence customer. The company also emphasized that performance outlook has significantly improved, aiming to achieve $100 billion in artificial intelligence revenue in the 2027 fiscal year. Therefore, we have raised our earnings per share (including SBC) expectations for the 2026 and 2027 fiscal years by 14% and 17% respectively, to $10.15 and $15.4."