Broadcom CEO Hock Tan Just Delivered Incredible News for Shareholders

Paying attention to what CEOs say during earnings calls is something that investors should do for all their stock picks, but especially when it comes to companies that operate in rapidly shifting fields such as artificial intelligence (AI). One of the emerging players on the scene is Broadcom (NASDAQ: AVGO), as its custom AI chips offer a viable alternative to graphics processing units (GPUs) from Nvidia (NASDAQ: NVDA) in some applications.

Broadcom CEO Hock Tan recently made some comments regarding the outlook for this business that investors will want to be aware of. If he's right, the stock is a screaming buy right now.

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Broadcom expects monster growth from its custom AI chip business

Broadcom's custom AI chip business operates differently from most others. Instead of offering general-purpose processors that are marketed to every company, it partners with individual hyperscalers to design application-specific integrated chips (ASICs) that are tailored to handle precisely the sorts of AI workloads that the buyer expects them to face. This gives them a powerful chip that is more efficient and cost-effective in those particular applications, at the cost of flexibility. With every hyperscaler looking for ways to add computing power while minimizing costs, Broadcom's solution is an attractive option to complement their GPU clusters.

Demand for these chips is soaring. During Broadcom's fiscal 2026 first quarter, which ended Feb. 1, its AI semiconductor revenue totaled $8.4 billion, up 106% year over year. Custom AI chips are a division within that business unit, and that segment's revenue rose by 140% in Q1. However, the long-term outlook is far brighter. Tan had this to say:

Reflecting the foregoing factors, our visibility in 2027 has dramatically improved. Today, in fact, we have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027. We have also secured the supply chain required to achieve this.

Given that the AI semiconductor segment as a whole only generated $8.4 billion in revenue during Q1, and custom AI chips are only a subsection of that, Tan just told investors that the revenue run rate will more than double over the next year alone. That has huge implications for shareholders.

Over the past 12 months, Broadcom as a whole generated $68 billion. AI chips weren't a large portion of this total, so it's probable that Broadcom's revenue will at least double or maybe triple by the end of next year.

Any time you can pinpoint a company that can double or triple its revenue in two years, it is well worth further investigation as an investment. I think Broadcom is among the best buys in the market. Investors should load up now before everyone else catches on.

Keithen Drury has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.