Broadcom pares losses as revenue is projected to double in both 2027 and 2028

Broadcom shares rebounded after CEO Hock Tan assured investors that the company's revenue would double in both 2027 and 2028 during the earnings call. The news came soon after the chipmaker reported fourth-quarter revenue falling short of Wall Street expectations, triggering concerns that fierce competition in custom artificial intelligence processors could impede growth.

However, Tan's projections of $115 billion in revenue for fiscal 2027 and a further doubling to $230 billion in fiscal 2028 alleviated those worries. The AI chip sales forecast of $21.7 billion for the fourth quarter was slightly higher than analysts' estimate, demonstrating the continued robustness of Broadcom's AI business. Despite the chipmaker's custom-chip business facing heightened competition from major tech companies looking for alternatives to Nvidia's leading AI processors, Broadcom has been focusing on expanding its manufacturing capacity and reducing reliance on individual suppliers due to the strain on the semiconductor supply chain.

The company signed a memorandum of understanding with Samsung Electronics in July, part of these expansion efforts. While Broadcom's AI business continues to thrive, with AI chip sales tripling in the third quarter to $16.7 billion, boosting total revenue to $29.59 billion, the weaker-than-expected revenue outlook indicates that investors are now more concerned about the company's ability to maintain its rapid growth as hyperscalers diversify their custom-chip suppliers.

Broadcom's stock has risen about 6% this year, trailing major semiconductor peers and the broader chip index.