Core Viewpoint - Morgan Stanley predicts that Broadcom's AI revenue will exceed $50 billion in fiscal year 2026, driven by the continued ramp-up of Google's TPU and new orders from Meta [1][2][3] Group 1: Short-term Performance - Strong demand for AI networking and custom ASICs is expected to drive Broadcom's revenue for the October quarter and January quarter guidance above market consensus [1][2] - For the upcoming October quarter (F4Q25), revenue is projected to exceed $17.5 billion, with AI revenue expected to reach over $6.6 billion, surpassing the market expectation of $6.2 billion [2][6] - January quarter guidance is anticipated to exceed $19 billion, significantly higher than the market consensus of $18.5 billion, supported by ongoing demand for Google TPU and Meta MTIA projects [2][6] Group 2: Long-term Growth Potential - Broadcom is expected to achieve approximately $20 billion to $21 billion in AI revenue for fiscal year 2025, representing a year-over-year growth of about 60% [3] - The growth is primarily driven by the ongoing iteration of Google's TPU project, with the current TPU v6 3nm (Ironwood) chip in mass production and the next-generation TPU v7 expected to ramp up in mid-2026 [3][5] Group 3: Non-AI Business and Synergies - Broadcom's traditional semiconductor business is gradually improving due to cyclical trends, while VMware's software infrastructure continues to show strong momentum [7] - The report highlights the accelerating revenue synergies from VMware as large enterprise customers renew contracts and upgrade to higher-priced VCF full-stack solutions [7] - Broadcom's strong fundamentals in AI, combined with aggressive synergies in its software business, create a unique investment logic [7] Group 4: Financial Performance and Cash Flow - Broadcom is expected to achieve strong double-digit free cash flow growth, supporting future dividend increases [7] - The company is anticipated to announce a double-digit dividend increase during the earnings call, with strong cash flow also aiding in deleveraging and reducing interest expenses [7]

Core Viewpoint - Morgan Stanley has a highly optimistic outlook for Broadcom, reiterating an "overweight" rating ahead of the company's earnings report, with AI revenue expected to exceed $50 billion by fiscal year 2026, driven by various projects and product launches [1][2]. Group 1: Earnings Forecast - Morgan Stanley anticipates Broadcom's revenue and earnings per share for the upcoming fiscal quarter (F4Q25) to surpass market consensus, with AI revenue projected to exceed $6.6 billion, higher than the expected $6.2 billion [1][3]. - For the January quarter, revenue guidance is expected to exceed $19 billion, significantly above the market consensus of $18.5 billion, driven by strong demand for Google TPU and Tomahawk 5 chips [1][3]. Group 2: AI Revenue Growth - Broadcom is projected to achieve approximately $20 billion to $21 billion in AI revenue for fiscal year 2025, representing a year-over-year growth of about 60%, with expectations to exceed $50 billion in fiscal year 2026 [2]. - Key growth drivers include the ongoing rollout of Google's TPU v6 chips and Meta's MTIA inference chip project, along with potential new clients such as Softbank/ARM and OpenAI [2]. Group 3: Non-AI Business and Synergies - Morgan Stanley notes a gradual improvement in Broadcom's traditional semiconductor business, with VMware's software infrastructure showing strong momentum due to enterprise clients upgrading to higher-priced solutions [4]. - The combination of strong AI fundamentals and aggressive synergies in the software business creates a unique investment thesis for Broadcom, which is positioned as a leading supplier in the AI semiconductor market [4]. Group 4: Cash Flow and Dividend Outlook - Strong cash flow is expected to support a double-digit increase in dividends, with continued deleveraging efforts reducing interest expenses and enhancing profitability [5].