The Silent Engine: How Broadcom Powers the AI Revolution from Behind the Scenes

Broadcom's AI revenue doubled to $8.4B, fueled by deep partnerships with Google, Anthropic, and others. It targets $100B in annual AI chip sales by 2027.

While many semiconductor companies compete for public attention, Broadcom has cemented a far more critical role: the indispensable design and development partner for the world's leading AI firms. Its deep collaboration with Google, now extending into the seventh generation of Tensor Processing Units (TPUs) codenamed Ironwood, is bringing this foundational partnership into sharper focus for investors.

Financial Performance Anchored in AI

Broadcom's recent quarterly results provide a clear snapshot of its accelerating momentum. For the first quarter, total revenue surged 29% to $19.3 billion. Adjusted EBITDA grew by 30%, reaching a record $13.1 billion. A standout figure was the AI segment, where revenue doubled year-over-year to $8.4 billion. Management guidance points to AI chip sales hitting $10.7 billion in the current quarter. Looking further ahead, CEO Hock Tan has set a target of at least $100 billion in annual revenue from the AI chip business by fiscal year 2027.

Beyond Google: A Expanding Ecosystem of Partnerships

Broadcom's work on Google's Ironwood involves complete ASIC development, handling everything from high-performance compute cores and proprietary SerDes interfaces to translating Google's specifications into a finished chip design. Industry analyst firm TrendForce anticipates a significant expansion of this program by 2026, forecasting annual TPU growth exceeding 40%. This would position Google to deliver the highest unit volumes among cloud providers.

The scope of these partnerships, however, now stretches well beyond a single client. CEO Hock Tan confirmed a $10 billion order for Ironwood racks from AI firm Anthropic, followed by an additional $11 billion follow-on order in the most recent quarter. Anthropic's plans involve integrating one million TPU chips into its infrastructure by 2026. Furthermore, Broadcom is engaged in discussions with Microsoft regarding a joint chip design and is already developing custom solutions for OpenAI.

Infrastructure Leadership and Market Outlook

Complementing its chip design prowess, Broadcom is strengthening its position in AI networking infrastructure. Its Tomahawk 6 switch ASIC, which entered volume production in early 2026, is the world's first 102.4 Tbps switch. This technology enables the construction of clusters with over one million processors while maintaining minimal latency. Analysts note that inference tasks are projected to constitute roughly 70% of total AI computing power by the end of 2026—a segment where specialized ASICs like Broadcom's hold structural efficiency advantages over general-purpose GPUs.

The company also continues to return capital to shareholders, with a quarterly dividend of $0.65 per share payable on March 31. This provides a consistent signal of commitment to shareholders alongside aggressive growth investments.

Substantial Upside Seen by Analysts

The investment community reflects strong confidence in Broadcom's trajectory. Currently, 47 analysts recommend purchasing the shares, with not a single sell rating issued. The average price target stands at $472. Compared to a recent trading price around 278 euros, this implies considerable potential upside. Market experts cite several key drivers, including year-over-year growth of 140% in custom AI accelerators and 60% in the networking business.