Broadcom(US:AVGO)2025-12-01 00:49Summary of Broadcom Inc (AVGO US) Conference Call Company Overview - Company: Broadcom Inc (AVGO US) - Industry: Semiconductors & Equipment - Market Cap: USD 1,673,701 million - Current Share Price: USD 354.42 - Target Price: USD 535.00, representing a 51% upside from the current price [7][5] Key Points ASIC Revenue Growth - ASIC Revenue Estimates: FY26e ASIC revenue is revised up by 46% to USD 44.7 billion, and FY27e by 63% to USD 72.0 billion, significantly above the consensus estimates of USD 30.9 billion and USD 45.4 billion respectively [2][36] - Customer Contributions: Major customers include Alphabet (expected to contribute USD 31.2 billion in FY26e), Meta (USD 7.2 billion), and a new customer, Anthropic (USD 5 billion) [34][35][36] - TPU Shipments: Alphabet's tensor processing unit (TPU) shipments are expected to increase from 1.7 million to 3.1 million units in FY26e [2] Networking Revenue Potential - AI Networking Growth: The total addressable market (TAM) for AI networking is expanding, with FY26e and FY27e revenue estimates 8% and 11% above consensus [3][50] - Market Leadership: Broadcom is the market leader in Ethernet switches and is expected to gain significant market share in digital signal processors (DSP) [48][49] Earnings Projections - EPS Estimates: FY26e EPS is projected at USD 11.68, only 5% below consensus FY27e EPS of USD 12.31, indicating potential for significant upside [4][56] - Comparison with Peers: Broadcom's growth rates are expected to outpace peers, with FY27e earnings growth of 43% compared to the average of 30% for AI accelerator plays [21] Market Dynamics - CSP Capex Growth: Consensus estimates for cloud service provider (CSP) capex for 2026e and 2027e have been revised up by 40% and 63% respectively, indicating strong demand for AI-related investments [27] - ASIC Revenue Growth Rate: ASIC revenue is expected to grow at a CAGR of 119% from 2023 to 2027, outpacing AI GPU revenue growth of 82% [27][31] Strategic Initiatives - OpenAI Collaboration: A deal with OpenAI for 10GW of custom AI accelerators could represent a revenue opportunity of approximately USD 14 billion per GW deployment, although details on Broadcom's role remain unclear [43][45] - Capacity Expansion: CoWoS capacity allocation is expected to increase from 150k wafers to 250k wafers in FY26e due to heightened demand from core customers [36][19] Valuation and Investment Recommendation - Target Price Adjustment: The target price has been raised from USD 400 to USD 535 based on revised EPS estimates and market conditions [5] - Investment Rating: The stock is maintained as a "Buy" due to strong growth prospects in ASIC and AI networking revenue [5][19] Additional Insights - Revenue Contribution from AI: AI revenue is projected to increase from 31% of total revenue in FY25e to 64% in FY27e, highlighting the growing importance of AI in Broadcom's business model [56][59] - Market Positioning: Broadcom's strategic positioning in the AI semiconductor space, particularly with its ASIC offerings, is expected to yield significant competitive advantages moving forward [19][21] This summary encapsulates the critical insights from the conference call, focusing on Broadcom's growth potential, market dynamics, and strategic initiatives within the semiconductor industry.