Following the release of its financial results, Broadcom (AVGO.US) has received praise from Wall Street analysts, who describe the semiconductor and software giant's outlook for 2027 as "strong," indicating the company's continued heavy investment in artificial intelligence. Jefferies analyst Blayne Curtis wrote in a report to clients, "The projected AI market size exceeding $100 billion for fiscal year 2027 may be overly conservative, as Broadcom anticipates providing 10GW of computing power, including over 1GW for its sixth announced customer, OpenAI. Excess AI spending is likely to persist, but Broadcom has sufficiently demonstrated that its AI revenue will outpace the market average and maintain sustained growth through 2028." Curtis rates Broadcom as "Buy" with a $500 price target. He further noted that Broadcom's management stated during the earnings call that demand for fiscal 2027 has already reached 10GW, which includes the previously mentioned 1GW for OpenAI and 3GW for Anthropic. Given the company's expectation that AI chip revenue will surpass $100 billion in 2027, Curtis believes this estimate might still be conservative. Curtis speculated, "Our calculations suggest revenue of $13 billion per GW in 2025, slightly under $18 billion in 2026, and we anticipate it reaching $20-25 billion per GW by 2027, implying AI revenue could potentially exceed $200 billion." Curtis added, "Overall, the debate for Broadcom (and NVIDIA) remains whether cloud capital expenditure growth is sustainable through 2028. This call didn't directly answer that, but it helps us foresee fiscal 2027 EPS reaching $25-30 (above our prior $20 forecast), making it difficult to imagine these compute stocks maintaining such low valuations." RBC Capital Markets analyst Srini Pajjuri was also impressed with Broadcom's 2027 outlook but noted some factors potentially outside the company's control. Pajjuri wrote in a report, "Broadcom has a solid execution track record, and we see little reason to question management's insight. However, the expected capacity of 10GW for fiscal 2027 (compared to approximately 3GW in fiscal 2026) implies a very rapid production ramp, which could encounter power/data center constraints. Furthermore, key customers Anthropic, META, and OpenAI have supply agreements with equity incentives from NVIDIA/AMD, which might take priority over Broadcom's capacity ramp." Pajjuri maintains an "Sector Perform" rating on Broadcom and raised his price target from $340 to $360 following the earnings report. Citi analyst Atif Malik reiterated his "Buy" rating post-earnings, as concerns regarding margins or competition have been alleviated. Malik wrote in a client report, "Management indicated that shipments of Anthropic racks will not pressure margins and confirmed OpenAI as its sixth AI customer. The company also emphasized a significantly improved performance outlook, expecting to achieve $100 billion in AI revenue by fiscal 2027. Consequently, we have raised our fiscal 2026 and 2027 EPS (including SBC) estimates by 14% and 17% to $10.15 and $15.40, respectively."
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