Broadcom stock has surged on soaring demand for custom artificial intelligence chips, with the semiconductor designer climbing 24% year-to-date as hyperscalers ramp spending on AI infrastructure. The company’s second-quarter fiscal 2026 results underscored the scale of this opportunity: AI semiconductor revenue hit $10.8 billion, up 143% year-over-year, according to earnings released in early June.
CEO Hock Tan guided third-quarter AI revenue to $16 billion, representing over 200% year-over-year growth, as major cloud providers including Google, Meta, OpenAI, and Anthropic expand their orders for custom chips. For the full fiscal year 2026, Broadcom expects to achieve $56 billion in AI semiconductor revenue, up approximately 180% from fiscal 2025, according to company guidance.
The company’s strategic position centers on custom silicon. Rather than competing directly with Nvidia on general-purpose GPUs, Broadcom designs specialized accelerators tailored to each hyperscaler’s workloads. Meta extended its custom chip partnership with Broadcom in April 2026 through 2029, while OpenAI and Broadcom announced a collaboration in October 2025 to deploy racks of AI accelerator systems starting in the second half of 2026.
Broadcom’s backlog reflects the intensity of this demand. The company carries a $73 billion AI backlog as of mid-2026, according to industry analysis, and Tan has publicly targeted exceeding $100 billion in annual AI chip sales by 2027. Bank of America analyst Vivek Arya named Broadcom a top large-cap chip pick for 2026, emphasizing custom chips as a way for cloud providers to reduce their dependence on external suppliers and improve their cost structure.
The broader semiconductor sector has benefited from this AI infrastructure supercycle. Global semiconductor industry revenue could increase 64% in 2026 to $1.32 trillion, powered by robust demand for AI chips, according to Gartner. The Philadelphia Semiconductor Index (SOX) has posted gains of roughly 75% year-to-date as of late May 2026, according to the Financial Times, reflecting investor appetite for chips underpinning the AI buildout.
Broadcom’s Q2 performance demonstrated the earnings power of this transition. Total revenue surged 48% year-over-year to $22.2 billion, and the company posted an eighth consecutive earnings-per-share beat. Free cash flow reached $10.26 billion, representing 46% of revenue, signaling the profitability of the AI chip business even as the company scales production.
Analysts project further upside if Broadcom executes on its guidance. Bank of America has set a $530 price target on the stock, citing the 48% year-over-year revenue increase and the structural nature of hyperscaler capex. Mizuho told clients to buy the dip following the post-earnings pullback in June, projecting a $600 billion-plus revenue opportunity from Google’s TPU buildout by 2028 alone, according to research notes.
The custom AI chip opportunity extends beyond the three hyperscalers already in production. Broadcom announced in March 2026 that it would deliver 1 gigawatt’s worth of TPUs for AI startup Anthropic in 2026, with demand rising to 3 gigawatts in 2027. This pattern—major AI labs and cloud providers building their own silicon to optimize cost and performance—is expected to persist throughout the decade, giving Broadcom a multi-year growth runway.
Sources
- Broadcom earnings release — Q2 FY2026 results, AI semiconductor revenue, full-year guidance
- 24/7 Wall St. — Stock performance YTD, CEO guidance for Q3 AI revenue
- Qz.com — Q2 AI chip revenue growth and analyst reaction
- Reuters — Broadcom AI chip forecast and full-year revenue expectations
- Meta investor announcement — Extended custom chip partnership through 2029
- OpenAI press release — Strategic collaboration to deploy AI accelerator systems
- Tom’s Hardware — Broadcom AI backlog and 2027 revenue targets
- Bank of America analyst research — Vivek Arya’s semiconductor outlook and Broadcom price target
- Gartner — Global semiconductor revenue forecast for 2026
- Financial Times — Philadelphia Semiconductor Index performance year-to-date
- Mizuho Securities — Google TPU buildout revenue opportunity
- Reuters — Anthropic TPU deployment and Broadcom guidance
