Broadcom Soars on AI Demand, Raises Guidance Amid Nvidia Constraints

Broadcom (NASDAQ: AVGO) surged over 12% in premarket trading after delivering strong fiscal Q1 results and upbeat guidance, fueled by soaring demand for its AI chips. The company reported adjusted earnings of $1.60 per share on $14.92 billion in revenue, surpassing estimates of $1.51 per share and $14.59 billion in revenue.

AI-driven revenue skyrocketed 77% year-over-year to $4.1 billion, while semiconductor solutions climbed 55% to $8.2 billion. Infrastructure software revenue also surged 45% to $6.7 billion. Broadcom expects fiscal Q2 revenue of $14.9 billion, exceeding the $14.73 billion consensus.

CEO Hock Tan highlighted growing AI chip demand, revealing that four additional hyperscale customers are now working with Broadcom, increasing its long-term revenue outlook for 2027 beyond the prior $60 billion to $90 billion estimate. Broadcom’s momentum has been amplified by supply constraints at Nvidia (NASDAQ: NVDA), pushing tech giants like Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) to explore alternatives.

Despite market concerns over AI investments, analysts remain optimistic. Bernstein noted Broadcom’s AI growth is offsetting weaknesses in its core business, with AI revenue expected to ramp up through 2025. Meanwhile, worries persist over Broadcom’s reliance on Apple (NASDAQ: AAPL), as the iPhone maker moves toward in-house chip development.

The report challenges fears that AI stocks are losing momentum, reinforcing Broadcom’s position in the booming semiconductor sector.