Broadcom Inc.

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Broadcom Inc. stock analysis AVGO overview
Very Bullish +78

Broadcom Q2: Why The FY 2027 $100B Target May Already Be Obsolete

📈 Analyst estimates suggest Broadcom's FY 2027 AI revenue target of $100 billion is now a conservative floor given recent commitments.

💼 Google, Anthropic, and Meta have signed multi-year contracts for up to 3.5 GW of chip capacity following April disclosures.

📅 Q2 earnings will be reported on June 3rd, providing an opportunity for management to update backlog figures and revise guidance.

⚠️ OpenAI's Project Nexus faces an $18B financing impasse, while Jalapeño has slipped to the FY2027 timeline, which could dampen sentiment.

🚀 Analysts from Bernstein and BofA believe recent agreements reduce risk around the 2027 gigawatt count enough to support upgrading AVGO stock.

🗣️ In March 2026, Broadcom CEO Hock Tan confirmed "line of sight" to exceeding $100B in AI chip revenue for the fiscal year.

⚙️ Current pricing for high-performance chips stands at approximately $20 billion per gigawatt of capacity.

📊 The article author holds a long position in AVGO, ANET, NVDA, and MSFT and discloses a beneficial interest in these shares.

👨‍💼 The author describes a contrarian investment style focusing on deep value stocks after sell-offs caused by non-recurrent events.

🛡️ Standard disclosure notes clarify that the article reflects personal opinions and is not tailored investment advice or a recommendation to buy or sell.

Bullish Signals
  • Google is locked into a deal through 2031 and Meta extended their commitment through 2029, providing long-term demand visibility.
  • Management is set to refresh the backlog at June 3 Q2 earnings print, which could lead to a revision of the FY2027 guidance higher.
  • The stock may already be undervalued given the strength of the new agreements, prompting consideration for an upgrade ahead of earnings.
Risk Factors
  • OpenAI's Project Nexus faces an $18B financing impasse, creating significant overhang for a major AI infrastructure project.
  • Jalapeño appears to have slipped to 2027, indicating potential delays in expected revenue recognition from this key business segment.
  • The $100B AI revenue target for FY2027 may be obsolete or already achievable too early due to market changes, implying the guidance could be revised down rather than up despite optimistic analyst math.
Full Analysis
Broadcom Inc. (AVGO) could significantly exceed its previously stated goal of $100 billion in AI chip revenue for fiscal year 2027, which analysts now view as a conservative floor rather than a target. Following April agreements that included major commitments from Google through 2031 and Meta through 2029, along with an additional 3.5 gigawatt of capacity secured from Anthropic, the stock is being re-evaluated ahead of its Q2 earnings release scheduled for June 3. At current pricing of approximately $20 billion per gigawatt, existing commitments alone suggest revenue well beyond the initial projection, potentially requiring a higher fiscal guidance upon the new backlog data revealed at earnings. Despite this positive momentum regarding large-scale deals, sentiment in the sector faces headwinds from OpenAI's Project Nexus project, which reportedly hit an $18 billion financing deadlock and may be delayed to 2027, complicating broader industry demand expectations. The author suggests that the recent contracts effectively de-risked the gigawatt count for 2027 enough to warrant upgrading AVGO ahead of the earnings print, particularly noting that management will have an opportunity to refresh the backlog figures with April's agreements during the June 3 earnings call. This could lead to a revision of the FY2027 guidance higher than previously expected by market standards. The content is written from the perspective of a small deep value investor with a contrarian style who utilizes technical and fundamental analysis, noting a specific interest in stocks that have experienced sell-offs due to non-recurrent events. The article clarifies the author's position in AVGO, as well as in competitors like ANET, NVDA, and MSFT, while disclosing that no compensation was received other than from Seeking Alpha. The piece emphasizes personal investment opinions rather than tailored financial advice, noting that the FY2027 target of $100 billion may already be obsolete given the scale of commitments made since the last disclosure of a $73 billion backlog.