Broadcomjust hit $1.3 trillion in market cap, and some analysts think that’s just the beginning. The chip giant’s custom AI processors are pulling in massive orders from tech’s biggest players, setting up what could be a sprint to $2 trillion by 2028.
The company’s AI revenue jumped 77% in Q1, then 46% in Q2. That’s not slowing down anytime soon—especially with Microsoft, Google, and OpenAI all designing custom chips to cut costs and boost performance.
The question isn’t whether Broadcom will keep growing. It’s whether it can maintain its 70% market share as everyone rushes into custom AI silicon.
Behind the Numbers Rush
Broadcom’s fiscal 2025 results tell the story. Revenue climbed 22% to $29.9 billion in the first half, with AI chips driving nearly 30% of total sales. The company moved $8.5 billion worth of AI processors in six months.
That’s already closing in on last year’s full total of $12.2 billion. Management expects another $5.1 billion in AI chip sales this quarter—a 60% year-over-year jump.
The momentum comes from a simple shift. Cloud giants are ditching expensive general-purpose GPUs for custom application-specific integrated circuits (ASICs). These chips cost less and run AI workloads more efficiently than traditional graphics cards.
Microsoft dropped two custom chips last year to speed up its data centers. Google unveiled its Ironwood AI processor three months ago, promising better performance at lower costs.
OpenAI is reportedly working with Broadcom to finalize designs for its own custom silicon. That’s a pattern playing out across the industry.
The Client List Keeps Growing
Broadcom’s customer roster reads like a who’s who of AI: Meta, ByteDance, Alphabet, OpenAI. Reports suggest xAI, Oracle, and Apple are joining the party.
Each new client expands Broadcom’s addressable market beyond the $60-90 billion range the company forecasts by fiscal 2027. TD Cowen thinks AI chip revenue alone could hit $50 billion by 2027—more than four times last year’s haul.
The math gets interesting from there. If Broadcom’s non-AI segments stay flat and AI revenue reaches $50 billion, total sales would climb to roughly $89 billion. At today’s price-to-sales ratio of 22.4, that puts market cap near $2 trillion.
That’s a 60% gain from current levels, assuming the valuation multiple holds steady.
Why This Matters for the Chip Wars
Broadcom’s dominance in custom AI processors—70% market share—comes at a crucial moment. As AI companies scale up, they’re realizing that off-the-shelf chips won’t cut it for their specific workloads.
Custom silicon offers two advantages: better performance per dollar and tighter integration with proprietary AI models. That’s why OpenAI wants its own chips instead of relying solely on Nvidia’s GPUs.
The shift could reshape the entire semiconductor landscape. Instead of a few companies making general-purpose AI chips, we’re moving toward dozens of custom designs optimized for specific tasks.
Broadcom sits at the center of this transition, designing chips for companies that can’t or won’t build their own fabs. It’s a middleman position that’s proving incredibly lucrative.
Where This Heads Next
The $2 trillion target isn’t just about revenue growth. It’s about Broadcom proving that custom AI chips represent a sustainable business model as the industry matures.
Competition will intensify as more companies enter the custom silicon space. But Broadcom’s early lead and deep customer relationships give it a buffer that most rivals lack.
The real test comes when AI spending eventually normalizes. Can Broadcom maintain premium margins, or will custom chips become a commodity business?
For now, the demand surge suggests there’s plenty of room to run.
