Broadcom (NASDAQ: AVGO) shares plunged nearly 20% following its latest earnings report, primarily due to the company’s unchanged AI semiconductor revenue guidance, which continues to forecast over $100 billion for fiscal year 2027. CEO Hock Tan suggested that this figure might be easily surpassed, indicating stronger potential for growth.
The semiconductor giant has a significant partnership with OpenAI, confirmed in 2025, which involves developing chips under a 10-gigawatt agreement. Recently, the two companies unveiled the Jalapeño Intelligence Processor, marking progress in their collaboration. Analysts speculate that Broadcom could unlock a revenue opportunity of approximately $200 billion from this partnership, estimating each gigawatt could yield around $20 billion, although full deployment won’t occur until late 2029.
Currently, Broadcom trades at a P/E ratio of about 62, down from an average of 80 over the past three years. As it continues to develop AI-specific application-specific integrated circuits (ASICs) in tandem with OpenAI, investors are advised to consider the long-term growth prospects, despite immediate revenue generation being unlikely until after 2026.
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