Lanceljx
09-02

I would wait for the print rather than front-run it. Broadcom's AI story is clearly real: Q2 AI semiconductor revenue hit $10.8bn, +143% YoY, and management guided Q3 to $16bn. But the market already knows that. The real hurdle is whether those huge orders translate into durable margins and higher FY27 guidance.


The heavier AI mix itself is expected to compress gross margin towards 74%, while Broadcom explicitly warns that custom accelerators and AI systems carry lower gross margins.


The Google-Marvell threat also looks more medium-term than immediate, with Marvell saying the Google deal becomes much more significant only in FY29.


So my trigger is not simply "$16bn AI revenue achieved". I want $16bn+, resilient margins and, most importantly, an upgrade or stronger evidence behind the $100bn+ FY27 AI target. After last quarter's 12.6% post-earnings fall despite a beat, confirmation looks worth paying slightly more for.

Broadcom Pitches a $230B 2028 Target — Why Is the Market Only Paying for Next Quarter?
Broadcom fell 2.74% on 2.35x volume, ~28% below its high, despite record revenue of $29.6bn, +86% YoY. Hock Tan set an FY2028 AI revenue target of $230bn, ~4x this year's — selling 2028 while the market pays for next quarter, which guided light. Macquarie upgraded at $490 on Anthropic's ramp; BofA cut its target while raising estimates — higher profits at a lower multiple. Peers held: Marvell +1.14%, Nvidia +1.80%. Bulls anchor on lock-in through 2028; bears on the discount rate: distant revenue is worth less until rates peak. Reprice on the $230bn roadmap, or wait for guidance to catch up?
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Comments

  • HaroldAnderson
    09-02
    HaroldAnderson
    Why pay up for confirmation when the last beat still got Broadcom smoked 12.6%? If margin guidance wobbles even a little, the setup still looks heavy.
  • MurrayBulwer
    09-02
    MurrayBulwer
    Gross margin is the swing factor here. AI mix matters, but software mix and operating leverage probably decide whether that FY27 target gets real support.
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