Broadcom’s $100 Billion AI Ambition Faces Its First Big Test on June 4

Broadcom guides $22B Q2 revenue, AI chip sales surge 140%, and a Swedish pension fund boosts its bet ahead of a key earnings test.

The numbers are staggering, even by the inflated standards of the AI chip trade. Broadcom has guided for $22 billion in second-quarter revenue—a 47% jump from a year ago—with its AI chip division alone expected to deliver $10.7 billion, representing a 140% surge. But the real headline is the longer-range target: $100 billion in cumulative AI chip revenue by 2027, a goal the company has publicly embraced and that now hangs over every earnings call.

That makes the June 4 report more than just a quarterly check-in. It is the first major test of whether Broadcom can sustain the growth trajectory needed to hit that century mark, and whether the market’s willingness to pay a premium for the stock is justified.

A Swedish Pension Fund Adds to Its Bet

One institution that appears comfortable with the risk is Alecta Pensionsforsakring. The Swedish pension fund recently added nearly 400,000 shares to its Broadcom position, betting on the chipmaker’s combination of high margins and strong free-cash-flow generation—attributes that set it apart from many semiconductor peers. The stock currently trades at €351, roughly 31% above its level a month ago and more than double where it stood a year ago.

The timing of Alecta’s move is notable. It comes just ahead of a quarter in which analysts expect earnings per share of $2.02, a 52% increase from the year-ago period. For the full fiscal year, the consensus stands at $9.95 per share, up from $5.63 in fiscal 2025. Broadcom already beat estimates in the first quarter, posting EPS of $2.05—roughly 9% above expectations.

The Google Factor: Diversification, Not Defection

Perhaps the most intriguing development in recent weeks has nothing to do with Broadcom’s own numbers. On April 20, Reuters reported that Google is in talks with Marvell Technology to develop two new AI chips—a memory processing unit and a next-generation TPU for efficient model inference. On its face, that looks like a threat to Broadcom’s custom-chip franchise.

The reality is more nuanced. Google appears to be building a multi-supplier architecture, parceling out different parts of its TPU program to Broadcom, MediaTek, and potentially Marvell—much like an automaker divides work among component suppliers. Broadcom’s supply agreement with Google runs through 2031, and the company also counts Meta, OpenAI, and ByteDance among its hyperscaler clients. That gives Broadcom an unusually high degree of order visibility.

Counterpoint Research estimates that Broadcom will hold roughly 60% of the custom AI accelerator market by 2027, with Marvell capturing about 25%. That still leaves Broadcom as the dominant player, but the competitive landscape is clearly shifting.

Networking Is the Next Growth Engine

While custom chips get most of the attention, Broadcom’s networking business is quietly becoming a major growth driver. In the first quarter, AI networking revenue grew 60% and accounted for one-third of total AI revenue. For the second quarter, the company expects that share to rise to 40%, fueled by demand for the Tomahawk-6 switch and its 200G SerDes technology—both of which are in high demand among hyperscalers building out massive AI clusters.

Six hyperscaler clients, including Google, Meta, and OpenAI, have multi-year deployment plans measured in gigawatt-scale capacity. Broadcom has also authorized a share buyback program of up to $10 billion through the end of 2026, and distributed roughly $11 billion to shareholders in the first quarter through dividends and repurchases.

Bullish Consensus, but Risks Are Real

Wall Street remains overwhelmingly positive. Morgan Stanley analyst Joseph Moore describes Broadcom as “the proven and durable accelerator story beyond 2026,” arguing that hyperscalers turn to Nvidia for training but increasingly rely on Broadcom’s custom chips for large-scale inference workloads. That positioning makes Broadcom less a competitor to Nvidia than a complement.

Of 42 analysts covering the stock, 35 rate it a “Strong Buy” and three a “Moderate Buy.” The average price target is $469.94, roughly 11% above current levels. Several firms—including Morgan Stanley, JPMorgan, and Bernstein—have raised their targets recently, citing strong demand for AI chips and networking gear.

But not everyone is convinced. HSBC, Citigroup, and Bank of America have trimmed their targets, citing lower sector valuations and questions about what multiple Broadcom deserves. The bear case centers on customer concentration: six hyperscalers drive nearly all of the custom accelerator business. If their appetite for AI infrastructure investment cools before June 4, the guidance could come under pressure—and with it, the stock’s elevated valuation.

The VMware integration, insider sales, and a price-to-earnings ratio that leaves little room for disappointment add to the list of concerns. Broadcom has set the bar high. On June 4, investors will find out whether the company can clear it.