Broadcom gets $1 billion valuation on the basis of lofty AI demand projections

Broadcom predicts a tremendous increase in demand for AI-powered chips, and the market is currently buying them outright.

The company’s worth surpassed $1 trillion on Friday, with shares rising 21% after CEO Hock Tan stated that AI may provide a $60 billion to $90 billion revenue opportunity by 2027, more than four times the current market size. On Thursday, Broadcom predicted that first-quarter revenue will be higher than expected.

Several experts claimed it was impossible to assess Broadcom’s market growth and potential share, with TD Cowen stating that the prediction is «hard to prove/refute, but it’s huge.»

Broadcom, which develops bespoke chips for big cloud providers, has benefited from the high cost and scarcity of AI processors.

Investors have also supported chipmakers that are already benefiting from the massive data centers being built by businesses like Microsoft and Meta, despite doubts about the profitability of AI investments in the technology industry as a whole.

Broadcom CEO Tan announced Thursday that the business has signed two big hyperscaler clients after generating $12.2 billion in AI revenue by fiscal 2024. That accounted for a sizable share of its anticipated overall market of $15 billion to $20 billion.