Broadcom Inc. (NASDAQ:AVGO) stock was up nearly 3% Friday, outperforming a weaker broader market as investors focused on the chipmaker’s expanding AI business and CEO Hock Tan’s long-term growth outlook.
The Nasdaq slipped 0.04%, the S&P 500 fell 0.45% and Technology (XLK) declined 0.15%, making Broadcom’s move stand out.
Hock Tan Sees Durable AI Demand
Tan said on Tuesday that the debate over slowing advanced AI development has not changed Broadcom’s long-term AI revenue outlook.
He said demand for AI compute infrastructure remains "very strong" and durable, particularly for inference.
Broadcom expects AI semiconductor revenue to reach $115 billion in fiscal 2027 and double to $230 billion in fiscal 2028.
Tan also said generative AI could "create huge value," while acknowledging the need for safeguards.
Infrastructure, Custom Chips Shape Growth Outlook
At the recent Goldman Sachs Communacopia + Technology Conference, Tan highlighted custom silicon, hyperscaler partnerships and rising infrastructure spending as key AI growth drivers.
He said Broadcom’s 2027 and 2028 AI forecasts face greater constraints from infrastructure availability than from customer demand. Power availability, transformers, permitting and data center construction could limit how quickly customers add capacity.
Broadcom works with six frontier-model developers on custom XPU accelerators, with OpenAI, Alphabet Inc (NASDAQ:GOOGL) Google and Anthropic among its customers. The company also has a long-term agreement to supply Google with TPUs and networking products through 2031.
Tan said Broadcom expects free cash flow in the mid-$40 billion range in 2027, with further growth anticipated in 2028. He also said the board could consider higher dividends or share buybacks when it reviews capital allocation in December.
Top ETF Exposure
- Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ): 9.30% Weight
- Pacer Data and Digital Revolution ETF (NYSE:TRFK): 9.42% Weight
- iShares US Tech Independence Focused ETF (BATS:IETC): 8.06% Weight
Significance: Because AVGO carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
AVGO Stock Price Activity: Broadcom shares are trading higher by 2.91% at $357.39 at the time of publication on Friday, according to Benzinga Pro data.
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