Nicholas Mugalli
Institutional TMT & Macro Research, AI/Semiconductors/Policy
Broadcom stands to benefit from Meta's growing MTIA shipments, though its position in later designs is less secure. KeyBanc estimates 300,000-500,000 MTIA units in 2026 and 600,000-800,000 in 2027. Its table shows Broadcom won Iris, Arke and Astrid, but Olympus was canceled, Phoebe went to GUC and Apollo has no award decision yet. x.com
Broadcom's post-earnings selloff was a positioning flush, not structural decay, and management's 2027 outlook confirms the AI ramp. The CEO said supply is secured to double AI revenue to about $110B in 2027. Anthropic should deploy 5 GW of TPU v8i in 2027 and 10 GW more in 2028, becoming the largest XPU customer; OpenAI's Jalapeño targets 1.3 GW in 2027 and 5+ GW in 2028. World Trade Securities, with a $500 target, notes Google is locked in as exclusive TPU partner through 2031. x.com x.com x.com
Broadcom's integrated optics, electronics and packaging could lower custom-chip system costs because separate suppliers defend their margins. At similar valuations, it is preferred to Nvidia and has more room to beat expectations. Google TPU v8 shipments are estimated at 4.0M in 2026 and 9.1M in 2027, assuming Broadcom supplies the remainder after MediaTek's allocation. Anthropic financing adds value only if chip profit exceeds likely support payments and capacity costs. x.com x.com
Broadcom remains one of the best risk-reward setups in semis, with long-term optionality if Meta builds its own compute cloud and powers some of it with MTIA or another Broadcom-designed custom ASIC. Its networking and CPO business is being entirely disregarded amid the MediaTek debate. x.com x.com
Broadcom is more overvalued than people realize. Its forecast of $230B in revenue by 2028 has the market valuing it at roughly $2T, yet Meta already generates that much revenue and is far less cyclical. x.com x.com x.com
Broadcom gains recurring revenue as design partner on Meta's four-generation custom Iris silicon program through 2029 at a six-month cadence, raising conviction. A leaked Meta memo, per Reuters, shows 7GW of compute in 2026 doubling to 14GW in 2027, with Iris entering production in September. Custom silicon also erodes Nvidia's 70%+ margins. The wider AI buildout is debt-fueled, with hyperscaler gross leverage doubling to 1.8x in two quarters. x.com x.com
Broadcom's custom silicon business stands to turn Anthropic's IPO funding into chip orders. The cash raised for Anthropic's compute spending would flow down the stack into Broadcom's order book. x.com
Broadcom borrowing again signals a $1.8 trillion company running low on cash. Per @KobeissiLetter, citing the WSJ, Broadcom is seeking more than $50 billion of financing for OpenAI's custom AI chip, with Apollo and Blackstone among the lenders it has approached. x.com
Broadcom's diverse networking exposure makes it one of the best positioned in the theme. The market has overlooked it year to date. Optical DSPs, Tomahawk and Jericho underpin the view; Tomahawk 6/7 ramps in 2027, and Tomahawk Ultra and optical DSPs should accelerate growth. New XPU customers and extended hyperscaler deals add to earnings upside and an eventual re-rating. Risks remain, and weak semiconductor flows warrant caution about calling a bottom. x.com
Broadcom's significant exposure to Anthropic's AI infrastructure spending and custom AI chips adds to its growth case. Annual EPS is projected to rise nearly fourfold from $8.06 LTM to $30.38 by FY2028, while the stock trades roughly 30% below its all-time high. x.com
Broadcom has no material upside left even if it hits its 2029 targets, because the AI capex boom is nearing its peak and its 25x sales multiple, up from 5x before 2023, would reset to about 10x. Hyperscalers are at their limits: Alphabet sold shares to raise funds, Meta is considering it and Amazon issued bonds, so frequent upward capex revisions are unlikely and a re-rating is inevitable. Nvidia, at about 20x forward earnings and 9x sales, is the better semiconductor bet. x.com
AI product, networking, compute and power demand could reward patient owners of Meta, Nokia, Oracle, Broadcom, IREN and Vistra. Meta's Muse could unlock massive revenue; free cash flow could recover when AI spending slows. Nokia works with Nvidia on AI-RAN and 6G. Oracle has $664B in obligations and massive potential reward from OpenAI. Broadcom's AI chip revenue rose 221% to $16.7B; IREN has a $9.7B Microsoft contract and 5 GW of power. AI power bottlenecks favor Vistra. x.com x.com x.com x.com … Show more
