While everyone obsesses over Nvidia, Broadcom just posted earnings that should make you question whether you're paying attention to the right AI chip story.
The numbers are absurd. AI semiconductor revenue hit $8.4 billion in Q1, up 106% year-over-year. That's a double. In one year. And it now represents 44% of Broadcom's total revenue, which came in at $19.31 billion, beating Wall Street's expectations handily.
Let me put this in context: Nvidia gets all the headlines, and deservedly so - they've been the picks-and-shovels play for AI infrastructure. But Broadcom is quietly building custom AI accelerators for the hyperscalers, the companies actually deploying AI at scale. We're talking Google, Meta, and others who need chips tailored to their specific workloads.
And here's the kicker: CEO Hock Tan isn't slowing down. The company raised Q2 revenue guidance to approximately $22 billion, well ahead of the $20.6 billion analysts expected. Management is now targeting $100 billion in AI chip revenue by 2027. Not total revenue. Just AI chips.
If you're doing the math, that implies AI chip revenue could more than 10x from 2025 levels in just two years. Even if they only hit half that target, it's a staggering growth trajectory.
Broadcom also announced a $10 billion share buyback program and raised its quarterly dividend to $0.65 per share. That's a company printing cash and returning it to shareholders while simultaneously doubling its core growth engine.
So why isn't this stock up 50%?
Honestly, I think the market is still figuring out how to value the "other" AI chip makers. Nvidia has the brand recognition. AMD gets the scrappy underdog narrative. Broadcom? They're doing the boring, profitable work of building custom silicon for the biggest customers in the world, and Wall Street hasn't fully repriced them for it.
There's a risk here, obviously. If AI spending craters, Broadcom's thesis evaporates. If the hyperscalers decide to go with cheaper alternatives or slow their buildouts, that $100 billion target looks ridiculous. And custom chip design is a lumpy business - big deals can take years to materialize and quarters to recognize revenue.
