Watch this Segment on Broadcom’s Rising Stock Prospects
Need-to-Know Summary
- Broadcom recently reported earnings, and the its results last quarter weren’t especially impressive. The company slightly topped Wall Street expectations last quarter and guided marginally ahead of expectations for next quarter.
- Key metrics for last quarter: AI revenue was up 46% overall. Broadcom’s networking business was an area of particular strength which is similar to what NVIDIA (Nasdaq: NVDA) reported.
- The biggest picture is what Broadcom is projecting for next year.
- The company guided to 60% AI revenue growth in 2026
- On the company’s conference call, Broadcom’s CEO said that the company may see AI demand accelerate in the back half of 2026.
- Who are Broadcom’s two main customers in the near term: Google and Meta.
- Both of those companies have recently had news that points to increasing demand for the custom chips Broadcom has partnered with them to design.
- Google reportedly has signed a deal with OpenAI that involves the use of its custom TPU chips.
- Meta is aggressively hiring a ‘super intelligence’ team and Zuckerberg continues investing heavily in AI.
- What’s the logical conclusion? Both of these companies are expecting a big ramp next year. That’s fantastic news for Broadcom investors.
- We’re seeing more and more data points pointing at the same thing: That rather than AI demand finally plateauing in 2026, it could actually accelerate. That’s the opposite of the ‘bubble popping’ scenario many bears have been forecasting.
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Transcript:
[00:00:03] Austin Smith: Okay. onto Broadcom, right? This is the Agentic AI episode. I want to get to our topic of agents. So let’s get through Broadcom next, before we move on there. what you’re seeing outta this, I think is, is a validation of the exact narrative you’re talking about, which is. AI not taking this breather, um, but actually accelerating.
[00:01:30] Eric Bleeker: This talk of acceleration and then we’re trying to triangulate our data points on it to see what’s happening. And when you look at Broadcom, who are their two biggest customers? Well, they make custom chips. Their biggest customer right now is Google. And the next big customer that’s coming online is Meta.
[00:01:49] Eric Bleeker: What new stories did we talk about earlier? Open AI going to Google. And Zuckerberg going all in on AI with and who is Google and Meta sharing their plans with for the long term. They’re sharing it with Broadcom. ’cause these custom chips take two to three years from planning to go into production. So what’s the logical conclusion that we can see with actual data and actual plans, the fact that both Google and Broadcom are planning for a significant ramp.
[00:02:24] Eric Bleeker: In the back half of last year. So Austin, it’s just, it’s more data points pointing at the same thing, which is rather than 2026 being a year of concern and, and wondering if the bubble pops to a period of acceleration that’s driven by, once again, two things. Increasing usage of ai because again, we talked about the numbers with uh, chat GPT and how much customers are engaging with and love it.
[00:02:50] Eric Bleeker: Then there’s also the expectation. That the key areas in the next year, such as agents and novel discoveries will be massive. And then there’s just buy-in from key decision makers who are making these plans. And that’s Zuckerberg Altman, the CEO of, uh, Google. And you know, if, if this plays out, you know, the bottom line is I would be very surprised if some of the most battered areas of our portfolio.
[00:03:16] Eric Bleeker: Weren’t winners over the next 18 months or so, so I, I just wanted to use Broadcom. We teed up stories and now we put a bow on it, right? This is, this is, sometimes I will say something about where I expect AI demand to go, and it’s hard to follow the logic through this week. You have a lot of stories where you’ve got this story and you’re able to track it all the way down.
[00:03:41] Eric Bleeker: To these other data points of companies reporting. So, you know, it’s, it’s, it’s been extremely bullish and I’ve, I’ve said in the past, I’m, I’m just really excited about where AI’s headed and, and it’s weeks, like the past two weeks that, you know, really validate this.
[00:03:55] Austin Smith: Yeah. And, and I hope investors are paying attention here because you did not one but two buys of Broadcom, both in late 24.
[00:04:01] Austin Smith: Both of those positions are up about 40% today. One slightly more, one slightly less, but you know, some impressive returns there out of an already gigantic company. That is looking ahead to potentially, um, fantastic returns in 26.
[00:04:14] Eric Bleeker: Yeah.
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