Broadcom Inc. (AVGO) is having a moment. The chip giant is expected to blow past quarterly expectations as artificial intelligence demand sends its custom chip and data center networking businesses into overdrive.
JP Morgan analyst Harlan Sur maintained his Overweight rating on the stock, and his latest projections paint a picture of staggering growth ahead. We're talking about a potential path from roughly $6.5 billion in AI revenue this quarter to over $50 billion in fiscal 2026. That's not a typo.
The October Quarter: Better Than Expected
Sur expects Broadcom to report stronger-than-expected results for the October quarter, driven by three main factors: robust demand for AI products, improving trends in non-AI semiconductor markets, and accelerating revenue synergies from the VMware acquisition.
The numbers look solid. The analyst is forecasting total revenue around $17.5 billion or more for the quarter, with AI revenue hitting somewhere between $6.5 billion and $6.7 billion—above what Wall Street is expecting. The star of the show? Alphabet Inc. (GOOGL)'s Google and its Tensor Processing Unit v6 (Ironwood) 3nm Application-Specific Integrated Circuit program, along with continued strength in Tomahawk 5 networking switches.
January Quarter Guidance: Even Stronger
Things get more interesting when you look at what's coming next. Sur anticipates management will guide the January quarter well above Street forecasts, projecting total revenue north of $19 billion and AI revenue approaching $8 billion.
What's driving that optimism? Continued momentum in AI networking, the production ramp of Google's TPU v6 chips, Meta Platforms Inc. (META)'s Meta Training and Inference Accelerator inference ramp, and early traction from newer custom chip programs.
The Path To $50 Billion
Here's where the story gets really compelling. For fiscal 2025, Sur projects Broadcom will generate roughly $20-21 billion in AI revenue—combining both custom chips (ASICs) and networking products. That represents a 60% year-over-year increase, which is impressive on its own.
But the analyst sees even more upside heading into fiscal 2026. As Google's TPU v7 program ramps up, Meta's MTIA 3nm chips scale, early OpenAI XPU work begins, and the company starts shipping Tomahawk 6 switches, Sur believes Broadcom could hit over $50 billion in AI revenue. That would represent more than doubling the fiscal 2025 number in just one year.
Beyond AI: The Rest Of The Business
It's not all about artificial intelligence, though that's clearly the main attraction. Sur expects the company's non-AI semiconductor markets—including enterprise, server and storage, and broadband—to gradually recover as cyclical conditions improve.
Meanwhile, VMware continues to deliver strong renewals and conversions to higher-value VMware Cloud Foundation full-stack solutions. That's important for the financial profile, as Broadcom continues to extract synergies from that massive acquisition.
Speaking of financials, Sur highlights the company's best-in-class gross margins, operating margins, and free cash flow profile. He's forecasting strong double-digit free cash flow growth that should support ongoing dividend increases and help the company pay down debt from the VMware deal.
A Top Pick For AI Exposure
Given Broadcom's position as a leading supplier of custom AI chips and cloud networking equipment, Sur reiterates the stock as his top semiconductor pick. The company has carved out a unique position designing custom chips for the biggest hyperscalers—the companies spending tens of billions on AI infrastructure.
AVGO Price Action: Broadcom shares were up 2.68% at $400.68 at the time of publication on Monday. The stock is trading near its 52-week high of $403.00.
