TLDR
- Broadcom closed at an all-time high of $481.57 on Tuesday, up 4.7% on the day
- Nvidia CEO Jensen Huang called Marvell “the next trillion-dollar company,” lifting sentiment across the custom chip space, including Broadcom
- Alphabet announced an $80 billion equity offering to fund AI infrastructure — Broadcom designs Google’s custom TPU chips
- Wall Street expects Q2 adjusted EPS of $2.40 on revenue of $22.1 billion, a 47% increase year-over-year
- Broadcom is targeting $100 billion in AI chip sales by 2027
Broadcom (AVGO) stock closed at a record high on Tuesday and heads into Wednesday’s earnings report on a four-session win streak, up 14% over that stretch.
The stock finished Tuesday at $481.57, up 4.7%, its best-ever closing price. In premarket trading Wednesday, it was up another 2.8%.
The Tuesday rally was sparked by two separate events that both pointed in the same direction: more AI spending is coming, and Broadcom is in the middle of it.
The first catalyst came from Nvidia CEO Jensen Huang, speaking at the Computex conference in Taiwan. He publicly backed rival chip designer Marvell Technology, saying it was “going to be the next trillion-dollar company.” Marvell’s market cap sits at roughly $192 billion today, meaning Huang was implying a near 400% jump.
Nvidia has taken a $2 billion stake in Marvell as part of a strategic partnership. Broadcom wasn’t mentioned by name, but it competes directly with Marvell in custom data center chip design. The endorsement lifted the whole space.
The second boost came from Alphabet, which announced plans to issue $80 billion in equity to fund AI capital expenditures. The company expects to spend up to $190 billion this year, with capex set to “significantly increase” in 2027.
That matters directly to Broadcom. Google is one of its six custom chip customers, and the two companies have worked together for over a decade. They’ve now built eight generations of Google’s Tensor Processing Unit — the TPU chips that power Google’s AI infrastructure.
AI Revenue More Than Doubled
Broadcom’s AI chip revenue came in at $8.4 billion in Q1 — double the year-ago figure — combining custom computing chips and networking chips. The company has set a target of $100 billion in AI chip sales by 2027.
Wall Street is expecting Q2 adjusted EPS of $2.40, up from $1.58 a year ago. Revenue consensus sits at $22.1 billion, a 47% year-over-year increase. Both would be records if hit.
Given the pace of growth, investors will be watching third-quarter guidance closely. Sales and earnings growth are expected to keep accelerating through the rest of the year.
Software Business Being Outrun
Broadcom’s software segment, which it built through acquisitions to smooth out chip cycle swings, now plays a smaller role. Last year software was 42% of revenue. By next year it’s expected to fall to around 20% as AI chip sales dominate.
Analysts still project about 11% software revenue growth in Q2, so it’s not shrinking — it’s just being lapped.
Over the past 12 months, AVGO is up 87%. The Nasdaq has gained just under 40% over the same period. Broadcom’s market cap has crossed $2 trillion, making it the world’s seventh-largest company by that measure.
Earnings are due Wednesday afternoon.
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