Broadcom’s Next $100 Billion AI Business Is Taking Shape. Here’s What It Means for AVGO Stock

Broadcom’s (AVGO) AI story is getting bigger. What was once a relatively small part of the business has now turned into a multibillion-dollar business. But what comes next could be much bigger. Management expects AI semiconductor revenue to exceed $100 billion in fiscal 2027, which would mark a dramatic jump from the $56 billion expected in fiscal 2026.

The opportunity is enormous, but much of that optimism may already be baked into AVGO stock.

The $100 Billion AI Business Is Already Taking Shape

Valued at a market cap of $1.7 trillion, Broadcom is a semiconductor and infrastructure software company. It makes chips and networking technology that power data centers, AI systems, broadband networks, and wireless devices, while its software business provides enterprise infrastructure and virtualization solutions. While the $100 billion AI business may appear as a distant dream, it has already begun to take shape. In the second quarter of fiscal 2026, Broadcom generated $10.8 billion in AI semiconductor revenue, an increase of 143% year-over-year (YoY). Now, for the full fiscal year, management forecasts AI semiconductor revenue to reach $56 billion for fiscal 2026, roughly 180% higher than fiscal 2025. 

More importantly, Broadcom is confident that fiscal 2027 AI semiconductor revenue will cross $100 billion. This indicates that Broadcom expects a significant expansion in just one year. And it won’t be coming from a single client or a single product. Broadcom shipped $10.8 billion of AI semiconductors during the quarter. The company is supplying custom AI accelerators, or XPUs, along with networking technology that allows massive AI clusters to communicate efficiently. And networking alone accounted for almost 40% of AI revenue in Q2. Management described demand for XPUs and networking as extremely strong and expects AI semiconductor revenue to accelerate sharply in the second half of fiscal 2026. For the third quarter, management expects AI semiconductor revenue of around $16 billion, which could imply a growth of more than 200% YoY. 

Google Is a Critical Part of the Story, but the Customer Base Is Expanding

Legacy tech giant Google (GOOG) (GOOGL) remains an important part of this $100 billion story. Broadcom has a long-term agreement with Google to develop and supply multiple generations of TPUs and AI networking technology. However, the company’s customer base has widened beyond Google. The company has another agreement with Anthropic to supply more than 1 gigawatt of Broadcom-powered TPU-based compute in 2026, followed by another agreement covering 5 gigawatts of next-generation TPU-based compute beginning in 2027. OpenAI is another client with a contractual commitment involving 1.3 gigawatts in 2027 as part of a bigger 10-gigawatt agreement extending into 2029.

Broadcom has also committed to deploying 3 gigawatts through the end of 2028 to Meta Platforms (META), with an initial 1-gigawatt order covering both XPUs and networking scheduled to begin shipping in the second half of 2027. The AI chipmaker is moving at a rapid pace, but the key takeaway is that Broadcom is achieving this growth without destroying profitability. Adjusted earnings per share (EPS) climbed 54% in Q2 to $2.44. The company even generated $10.3 billion in free cash flow. 

What Does It Mean for AVGO Stock?

Broadcom's potential $100 billion-plus AI semiconductor business could fundamentally reshape the company's earnings power. The combination of custom AI chips, networking, major hyperscaler relationships, and strong cash generation gives AVGO a credible path to becoming one of the top AI infrastructure players. However, reaching $100 billion isn’t the main challenge. It is whether the company can sustain that growth, protect margins, and keep winning new generations of AI infrastructure after it gets there. For now, analysts have high expectations from Broadcom. The company will report its fiscal third quarter earnings on August 26. The consensus estimate for revenue is $29.4 billion with adjusted earnings of $3.24 per share.

For fiscal 2026, analysts forecast Broadcom’s revenue to increase by 66% to $106 billion, while EPS is projected to jump 70% to $11.63 per share. At about 31x forward earnings, AVGO stock is not cheap, but the valuation looks more reasonable if the company can sustain that growth. Analysts expect revenue to rise another 63.5% in fiscal 2027, with EPS climbing 67.7% to $19.50. 

Wall Street Is Still Bullish, but Expectations Are High

Overall, Wall Street remains strongly bullish about AVGO stock. On Aug. 21, Mizuho Securities analyst Vijay Rakesh reiterated a “Buy” rating on AVGO with a $530 price target. Rakesh highlighted Broadcom's position in custom AI silicon and networking, along with its strong profitability and free cash flow generation. He also sees the company's AI revenue opportunity extending well into fiscal 2027 and 2028. Separately, BMO Capital also initiated coverage of AVGO with an “Outperform” rating along with a target price of $455, expecting “sustainable growth and solid profitability” in fiscal 2026. 

Of the 42 analysts covering AVGO stock, 33 rate it a “Strong Buy,” three say it is a “Moderate Buy,” and six rate it a “Hold.” Although AVGO has climbed just 2% year-to-date (YTD), the average target price of $517.31 implies the stock can surge over 46% from current levels. Plus, the high price estimate of $675 suggests an upside potential of 92% over the next 12 months.