- Company name
- Broadcom
- Sector
- Semiconductors & infrastructure software
- About
- Broadcom makes two kinds of products. The first is semiconductors. This includes custom AI chips, networking chips, and storage chips. The second is infrastructure software. This includes VMware, which Broadcom bought in 2023. Broadcom sells its AI chips to large technology companies. These companies use the chips to build AI data centers.
- Thesis
- Most of Broadcom's value depends on its AI chip business, which is still new. The market doubts this business will grow to the scale management has guided. Two of Broadcom's largest AI customers borrow money or raise capital to buy chips. This makes part of the demand look less certain than demand paid from a customer's own cash. For the gap to close, Broadcom must show its FY2027 AI chip revenue target is on track each quarter. Newer customers, like Anthropic, must also keep expanding their committed capacity as planned. Anthropic plans to use 1 gigawatt of Broadcom chips in 2026, growing to much more from 2027. Broadcom's fiscal Q4 2026 earnings report, expected near early December 2026, is the next checkpoint on this target. If the ramp stays on pace, the gap can close over the next three to five quarters. If a large customer slows spending, or a rival takes share, the gap could last longer.
- Risks
- Most of the fair value depends on one forecast: AI revenue reaching $115 billion in FY2027. A slower ramp would lower the fair value.
A small number of customers buy most of the AI chips. Two of the largest customers raise money from investors to pay for AI chips. This makes their spending less certain than a customer that pays from its own cash flow.
Broadcom competes with Nvidia in AI chips. A shift in market share could change future revenue.
- Recent events
- 2026-10-01: Reports on Anthropic's IPO filing said Broadcom agreed to lend Anthropic up to $42 billion as convertible notes. This covers about one third of a $125.2 billion five-year TPU lease.
2026-09-30: Reports on Anthropic's IPO filing said Anthropic has about $161.2 billion of mostly non-cancelable equipment lease obligations tied to Broadcom. The filing lists $518 billion of total compute commitments.
2026-09-02: Broadcom reported Q3 FY2026 results. Revenue was $29.59 billion, up 86% from last year. AI chip revenue was $16.7 billion, up 221% from last year.
2026-09-02: Management guided Q4 FY2026 revenue to about $34.8 billion. About $21.7 billion of this is AI chip revenue.
2026-09-02: Management said FY2027 AI chip revenue will be about $115 billion. This is about double the FY2026 number.
2026-09-02: Broadcom said Anthropic is on track to become its largest AI chip customer in 2027, and to stay its largest customer in 2028. Broadcom plans to deploy 1 gigawatt of Ironwood chips for Anthropic in 2026, growing to about 5 gigawatts of TPU v8i chips in 2027 and 10 more gigawatts in 2028.