When Broadcom (AVGO -1.25%) reported fiscal second-quarter results in early June, CEO Hock Tan repeated the biggest number in the company's story. Broadcom, he told analysts on the earnings call, still expects fiscal 2027 AI semiconductor revenue "in excess of $100 billion." For perspective, the company's total revenue over the past 12 months (enterprise software included) was about $75 billion.
The growth behind that target isn't in doubt. Artificial intelligence (AI) semiconductor revenue reached $10.8 billion in the fiscal second quarter of 2026 (the period ended May 3, 2026), up 143% year over year.
What's less settled is who all that money comes from. Tan says six core custom-chip customers drive the business, and to me, that customer count is the number worth studying before paying today's price for the stock.
Image source: The Motley Fool.
A $100 billion promise
Broadcom's fiscal Q2 was a record almost everywhere you look. Total revenue rose 48% year over year to $22.2 billion. Semiconductor solutions revenue climbed 79% to $15.0 billion, while infrastructure software revenue grew 9% to $7.2 billion. And free cash flow came in at $10.3 billion, or 46% of revenue.
The AI line is doing the pulling, and it's speeding up. A year earlier, quarterly AI semiconductor revenue was about $4.4 billion. In fiscal Q2 it hit a record $10.8 billion.
"The momentum continues and in Q3 we expect semiconductor revenue from AI to grow over 200 percent year-over-year to $16.0 billion," Tan said in the company's earnings release.
Chain those three periods together and you get an AI business that is accelerating, not settling down. Against that trajectory, a fiscal 2027 target bigger than the whole company's current annual revenue starts to sound less like a stretch and more like arithmetic.
Six buyers, most of the money
Tan said on the June call that Broadcom has six core custom-chip customers, and Alphabet's Google unit, Meta Platforms, Anthropic, and OpenAI are among them. In December, Tan said Anthropic alone had placed a $10 billion order for AI chips.
A $100 billion-plus target spread across six core buyers works out to an average of more than $16 billion apiece in fiscal 2027.
And the list isn't broadening. Tan said the two core customers he doesn't name have placed purchase orders totaling $6 billion so far, with shipments starting late this year and accelerating into 2027.
That is the scale problem in one number: $6 billion would be a meaningful order book for almost any chipmaker, and it's about 6% of the fiscal 2027 target.
What could slow it down?
Worth being clear about what management has and hasn't said here: Tan hasn't laid out a scenario where the forecast breaks. The concentration concern is my own, not one he raised.
But custom AI chips are capital projects. The six customers funding Broadcom's growth are all spending against the same AI build-out, on roughly the same clock. If even two of them paused their orders at the same time (because computing demand disappointed, or because a budget cycle turned), there's no long tail of smaller buyers underneath to absorb the hit.
A pause wouldn't even need to be dramatic. Tan himself noted on the call that the bookings coming in aren't for immediate delivery, and that customers still have other pieces to put in place before those chips can be delivered. A single delayed project could push billions of dollars of revenue into a later year.
Of course, some of the business doesn't ride that cycle. Infrastructure software, at $7.2 billion a quarter and growing 9%, is the steady piece of the company. And commitments from customers this large will likely take years to play out either way.
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Key Data Points
Priced for the ramp
At about $428 as of this writing, Broadcom trades at about 22 times the roughly $19.50 per share analysts expect the company to earn in fiscal 2027. Its price-to-earnings ratio on trailing GAAP earnings is about 71. The market, in other words, has moved on to next year's earnings -- the ramp Tan is promising is already baked into the price.
That's arguably a reasonable trade. After all, Broadcom has beaten its own AI forecasts repeatedly, and the fiscal Q3 outlook calls for the fastest AI growth yet.
But a $2 trillion valuation carried by six budgets is a different risk from a $2 trillion valuation carried by thousands of customers. The business is executing about as well as anything in the AI build-out. The customer list it depends on is short, and that is the risk I'd weigh most at this price.
