Broadcom (NASDAQ:AVGO) shares fell nearly 2% in premarket trading on Thursday after the company forecast fourth-quarter revenue below Wall Street estimates, while CEO Hock Tan outlined revenue projections for fiscal 2027 and 2028 during the company’s earnings call.
Broadcom expects fourth-quarter revenue of approximately $34.8 billion, compared with analysts’ average estimate of $35.05 billion.
The company forecast fourth-quarter AI chip sales of $21.7 billion, slightly above the analyst estimate of $21.33 billion.
Broadcom Projects Revenue of $115 Billion in Fiscal 2027
During the earnings call, Tan projected that Broadcom’s revenue would reach $115 billion in fiscal 2027 and $230 billion in fiscal 2028.
Broadcom shares reduced some of their earlier premarket losses following the comments.
Barclays analysts led by Tom O’Malley commented on the longer-term projections following the company’s update.
“NVDA guided out year revenue for the first time and AVGO chose to take it a step further with a first look at FY28,” the analysts said. “First and foremost, this should expel concerns of any near-term peak, but it brings into question the “you need to raise it every call” concern. The company explicitly said this would not be updated on a quarterly basis.”
Broadcom Faces Competition in Custom AI Chips
Broadcom’s custom-chip operations compete with other semiconductor companies as major technology groups seek additional suppliers for custom AI processors.
Marvell entered into a custom-chip agreement with Google last month that could generate up to $120 billion in revenue through fiscal 2033, according to the source material. The arrangement could also result in Google becoming one of Marvell’s largest investors through a stake valued at as much as $12.2 billion.
Broadcom has also been working to increase manufacturing capacity and reduce its reliance on individual suppliers as demand for AI infrastructure affects semiconductor supply chains.
In July, Broadcom signed a multi-year memorandum of understanding with Samsung Electronics as part of those efforts.
Third-Quarter Revenue Reaches $29.59 Billion
Broadcom reported third-quarter AI chip sales of $16.7 billion, more than three times the level reported for the comparable period.
Total revenue was $29.59 billion, above the analyst consensus estimate of $29.25 billion.
Adjusted earnings were $3.32 per share, compared with analysts’ estimate of $3.21 per share.
Broadcom shares have gained approximately 6% so far this year, according to the source material.
