Broadcom shares trade nearly 20% below the peak they set at the end of June, even after a roughly 14% gain so far in 2026. The chipmaker's AI semiconductor revenue is expected to exceed $100 billion in 2027, up from an annualized pace of about $43 billion this quarter, and its earnings multiple falls sharply once that growth is priced in.
Broadcom's stock has climbed about 14% year to date in 2026. Shares still sit nearly 20% below the peak the stock set at the end of June. That gap has opened even as the company's AI semiconductor revenue is expected to exceed $100 billion in 2027.
Custom AI chips gain ground on GPUs
Broadcom builds custom, application-specific chips that hyperscalers use as alternatives to general-purpose GPUs for predictable AI workloads. These custom chips are more cost-effective than GPUs for those specific workloads. As a result, AI hyperscalers have partnered with Broadcom to optimize their capex spending.
The company's AI semiconductor revenue reached $10.8 billion in the second quarter. That works out to about $43 billion on an annualized basis. The pace sits below the more than $100 billion in AI semiconductor revenue forecast for 2027.
Alphabet's TPU work underscores the model
Broadcom helped its biggest client, Alphabet, develop the Tensor Processing Unit. This custom chip is a big reason Google Cloud is growing so quickly, according to the analysis. Next year, additional custom-chip orders are set to expand Broadcom's customer base beyond the handful of clients it serves today.
Valuation multiple falls using 2027 estimates
Broadcom trades at 34 times this year's earnings estimates. Using 2027 estimates, that multiple falls to just 20 times forward earnings. Shares recently traded down 3.17%, or $12.43, at $380.00. That decline gave Broadcom a market cap of $1.9 trillion.
The stock's 52-week range spans $281.87 to $495.00.
Source: The Motley Fool
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