Broadcom positioned to rejoin $2 trillion club by 2027 on AI chip momentum

Broadcom has spent the last year becoming indispensable to the artificial intelligence industry. The semiconductor company manufactures the data center chips and components that power AI training and inference—the computational backbone that keeps the large language models running. Yet despite this central position, Broadcom's stock has lost a quarter of its value since June, dragged down by investor anxiety about whether the AI infrastructure boom can actually sustain itself. The company was once worth $2 trillion. Today, as of early September 2026, it sits at $1.77 trillion. The question now is whether it can climb back.

The skepticism makes surface sense. Over recent months, major technology companies have begun rationing AI usage among their employees and shifting workloads toward cheaper models to control costs. When spending discipline takes hold in the industry, semiconductor demand typically follows. But Broadcom's most recent quarterly earnings suggest the company still has substantial runway ahead. The real story isn't in the headlines about caution—it's in the shift happening beneath them, where the largest AI companies are moving away from buying generic chips and toward building their own.

Nvidia's graphics processing units remain the default choice for most AI work. They are powerful, proven, and widely available. But Alphabet, OpenAI, Anthropic, and Meta Platforms have all begun designing custom accelerators tailored to their specific needs, and Broadcom is the partner helping them build these specialized chips. Alphabet has a multi-generation partnership with Broadcom to manufacture its Tensor Processing Units, or TPUs. The company uses these chips to improve its Gemini AI models, rents them to developers through Google Cloud, and now sells them directly to customers like Anthropic. Broadcom recently began shipping Alphabet's new v8i TPU, which the company claims outperforms Nvidia's latest Vera Rubin GPU. The momentum is expected to accelerate through 2028 and 2029, with Anthropic positioned to become Broadcom's largest customer next year.

OpenAI took a different path. Rather than licensing Alphabet's TPUs, it worked with Broadcom to design an entirely separate accelerator called Jalapeño, built specifically for OpenAI's workloads and comparable in performance to Vera Rubin. This matters more than it might initially appear. When an accelerator is optimized for a particular large language model, Broadcom argues, it outperforms any general-purpose GPU. More importantly, it breaks the lock-in that companies have historically faced with suppliers like Nvidia, where pricing and innovation remain controlled by a single vendor. Custom chips give AI companies leverage they didn't have before.

The revenue numbers tell the story of how fast this is moving. In Broadcom's third quarter, which ended in early August, the company generated $29.6 billion in total revenue—an 86 percent jump from the same quarter a year earlier. That growth rate itself accelerated sharply from the previous quarter, when revenue had climbed 48 percent. The driver was unmistakable: AI semiconductor sales hit $16.7 billion, a 221 percent increase year-over-year. Management forecasted that AI semiconductor revenue could grow even faster in the current fourth quarter, potentially reaching $21.7 billion and representing 236 percent growth. The company's net income more than tripled to $13.1 billion in the quarter.

Broadcom's chief executive, Hock Tan, told investors that AI revenue could reach a record $115 billion in fiscal 2027, then double to $230 billion in fiscal 2028. He attributed the ceiling on growth not to demand—which he described as overwhelming—but to manufacturing capacity. If Broadcom could produce more chips, he said, it would immediately sell them. The company is essentially supply-constrained in an environment where customers are desperate to buy.

The valuation math is where the $2 trillion prediction takes shape. On a trailing-12-month basis, Broadcom's stock trades at 20.2 times sales, nearly double its 10-year average of 10.5. By that measure, the stock looks expensive. But Wall Street analysts project the company will generate $173 billion in total revenue during fiscal 2027. Using that forward projection, the price-to-sales ratio drops to 10.1—back to the historical average. If Broadcom executes on Tan's forecast to double AI revenue in 2028, the valuation becomes even more attractive. The path to $2 trillion depends on whether those growth targets hold and whether the market's confidence in the custom accelerator strategy continues to build.