Broadcom’s AI Revenue Is Taking Off. Back Up the Truck on AVGO Stock Now.

Broadcom (AVGO) is well-positioned to deliver strong growth in the quarters ahead. The semiconductor and infrastructure software company is witnessing strong growth in its artificial intelligence (AI) revenue, and the momentum is likely to accelerate as Broadcom’s custom AI accelerators, referred to as XPUs, see solid demand.

Last month, Broadcom expanded its partnerships with Alphabet's (GOOGL) Google and Anthropic. Per the U.S. Securities and Exchange Commission (SEC) filing, Broadcom signed a long-term agreement with Google to develop future generations of Tensor Processing Units (TPUs), the custom AI chips powering many of Google’s AI workloads. Moreover, Broadcom will also supply networking and infrastructure components supporting Google’s next-generation AI data center racks through 2031.

That matters because networking is becoming just as important as computing power in large-scale AI deployments. At the same time, Broadcom's expanded collaboration with Anthropic bodes well for long-term growth.

Broadcom’s AI Revenue Growth Is Accelerating

Broadcom’s latest quarterly results were strong, and the upcoming quarters are likely to witness further acceleration. During the first quarter of fiscal 2026, revenue climbed 29% year-over-year (YOY) to $19.3 billion, while adjusted EBITDA reached a record $13.1 billion.

AI semiconductor revenue surged 106% YOY to $8.4 billion, and the growth is expected to accelerate even further in Q2. Semiconductor revenue is projected to rise 76% YOY to $14.8 billion. At the same time, AI revenue is expected to jump 140% YOY to $10.7 billion. Overall, the company's total revenue guidance for Q2 is $22 billion, representing 47% YOY growth.

A major driver behind this growth is Broadcom’s custom AI accelerator business. Broadcom said that the deployments across its major AI customers are ramping aggressively, which will accelerate its growth rate. Management highlighted continued strength in Google’s next-generation TPU roadmap, while also pushing back against reports suggesting Meta Platforms (META) had reduced its ambitions for custom AI chips.

According to Broadcom, Meta’s MTIA accelerator roadmap remains active, with deployments already underway. The company also revealed that OpenAI is expected to deploy its first-generation XPU infrastructure at scale beginning in 2027.

Beyond AI accelerators, Broadcom is also becoming a dominant player in AI networking infrastructure. The company reported that AI networking revenue grew 60% YOY in Q1 and is expected to account for roughly 40% of total AI revenue in Q2. Products such as the Tomahawk 6 Switch and advanced SerDes connectivity solutions are seeing strong adoption among hyperscalers building next-generation AI data centers.

Perhaps the most striking takeaway from management’s commentary is the scale of the opportunity ahead. Broadcom has visibility into generating more than $100 billion in annual AI chip revenue by 2027, indicating a significant acceleration in growth. To support this growth, the company has already secured supply-chain capacity for critical components, reducing one of the major operational risks facing semiconductor companies during periods of rapid expansion.

While Broadcom’s revenue growth is likely to accelerate, solid top-line performance is translating into exceptional earnings leverage. Analysts expect Broadcom’s fiscal 2026 earnings to surge 76%, with strong momentum likely continuing into fiscal 2027. Current consensus estimates point to another 65% increase in earnings next year.

Should You Buy AVGO Stock Now?

AVGO stock is up about 22% year-to-date (YTD) and has significant potential upside. Demand for the company's custom AI accelerators continues to climb as hyperscalers ramp up AI infrastructure spending. At the same time, Broadcom’s networking hardware segment is gaining momentum, creating a solid growth engine.

These trends could drive strong revenue growth and expanding profit margins over the next several years.

Broadcom’s valuation also remains attractive relative to the company’s earnings outlook. AVGO stock currently trades at a forward price-to-earnings (P/E) ratio of roughly 41.8 times, a premium that appears justified given Broadcom’s accelerating AI exposure and strong long-term earnings growth trajectory.

With an expanding customer base and rising demand for AI, AVGO stock is a compelling stock to buy now. Analysts currently rate AVGO stock as a consensus “Strong Buy.”