Despite a 17% monthly decline, Broadcom's massive AI revenue growth and secured supply chains for hyperscalers like Google and OpenAI position the stock for potential long-term upside toward $550.
Broadcom's AI revenue surged 221% and management guided for massive future AI revenue, suggesting shares are undervalued.
Broadcom reported a 221% year-over-year surge in Q3 AI semiconductor revenue to $16.7 billion, yet shares remain down 17% over the past month. CEO Hock Tan projects AI revenue to reach $115 billion by FY2027 and $230 billion by FY2028, suggesting the current 24x forward earnings multiple may undervalue the company's long-term growth trajectory.
Key catalysts include multi-billion dollar annual TPU agreements with Google, the expansion of Anthropic as a major XPU customer, and the deployment of OpenAI's Jalapeno project.
Primary risks include gross margin compression due to rising HBM content, potential balance sheet drag from financing structures with Apollo and Blackstone, and high customer concentration among hyperscalers.