AI Chip Demand Fuels Broadcom Surge

The company's first-quarter revenue hit a record $19.3 billion, a 29% year-over-year increase that surpassed analyst expectations. This growth was overwhelmingly powered by its semiconductor solutions segment, where AI-related revenue alone surged 106% to $8.4 billion. Broadcom's forecast for the second quarter anticipates even faster acceleration, with projected revenue of $22 billion, representing a 47% jump from the previous year. Within that, AI semiconductor revenue is expected to climb 140% to $10.7 billion. This growth is fueled by its business in custom-designed chips, or ASICs, for major tech players. Broadcom collaborates with clients like Google on their Tensor Processing Units (TPUs) and recently confirmed OpenAI as its sixth major AI customer, with plans to ship its first custom chip in 2027. The company is also a key supplier for AI startups and other tech giants. Broadcom is set to deliver chips supporting 1 gigawatt of computing power for Anthropic in 2026, ramping up to 3 gigawatts in 2027. CEO Hock Tan also confirmed that Meta's custom accelerator chip roadmap is "alive and well" and currently shipping. While the AI chip business booms, Broadcom's infrastructure software segment, which includes the recently acquired VMware, provides a more stable, albeit slower-growing, revenue stream. Software revenue saw a modest 1% year-over-year increase in the first quarter. To underscore its financial health and commitment to shareholders, the company announced a new $10 billion share repurchase program, effective through the end of 2026. This followed a quarter in which it returned $10.9 billion to shareholders through dividends and buybacks.