Broadcom (AVGO) Stock Jumps Premarket on $100B AI Chip Forecast

Broadcom Inc. (AVGO) shares surged approximately 7% in premarket trading on Thursday, March 5, 2026, after CEO Hock Tan declared the company has clear visibility to surpass $100 billion in AI chip sales by 2027. The announcement came on the heels of a record-breaking fiscal Q1 2026 earnings report, where the company posted $19.3 billion in revenue and AI semiconductor sales that more than doubled year-over-year.

The bold forecast positions Broadcom as a formidable challenger to Nvidia’s dominance in the AI accelerator market, backed by high-profile chip partnerships with OpenAI, Anthropic, Google, and Meta. With a new $10 billion share repurchase program also announced, Broadcom sent a confident signal to investors navigating an increasingly scrutinized AI spending landscape.

Broadcom’s AI Strategy Challenges Nvidia’s Dominance

During Broadcom’s Q1 2026 earnings call, CEO Hock Tan stated the company has “line of sight” to exceed $100 billion in AI chip revenue in 2027, a figure that would represent a massive leap from the $20 billion the company reported in AI sales for all of 2025. For the current fiscal Q2, Broadcom projects AI chip revenue of $10.7 billion alone, underscoring the accelerating pace required to reach that annual target.

The company also confirmed it has secured the supply chain necessary to support this scale of production, adding credibility to what might otherwise seem like an aspirational milestone. Broadcom’s AI chip strategy centers on custom-built semiconductors, covering both AI accelerators and networking chips, serving as a direct alternative to Nvidia’s off-the-shelf GPU-based solutions.

Key client commitments include delivering over 3 gigawatts of tensor processing units to Anthropic in 2027, and shipping OpenAI’s first custom AI chip, exceeding 1 gigawatt of computing capacity, in the same year. CEO Tan also reaffirmed that Broadcom’s chip roadmap with Meta Platforms remains active, with next-generation products expected to scale to multiple gigawatts in 2027 and beyond, pushing back against recent reports suggesting Meta might be pulling back.

Analysts at Jefferies acknowledged that while concerns about AI spending returns will persist, Broadcom made a compelling case for its AI revenue growth outpacing the broader market. Even so, Nvidia’s scale remains in a different league — the company is expected to generate around $333 billion in AI data center revenue in fiscal 2027.

Big Tech firms including Alphabet, Microsoft, Amazon, and Meta are collectively forecast to spend more than $600 billion on AI infrastructure this year, a macro tailwind that benefits Broadcom’s networking and custom chip businesses simultaneously.

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AVGO Stock Snapshot: Premarket Surge and Key Metrics

As of premarket trading on Thursday, March 5, 2026 at 6:23 AM EST, AVGO was trading at $340.60, up $23.07 or 7.27%, following a regular session close of $317.53 on March 4. The stock had closed the prior day at $313.84, and the premarket surge reflected the market’s positive reaction to both the Q1 earnings beat and the $100 billion AI chip forecast. The stock’s 52-week range spans $138.10 to $414.61, and its current market cap stands at approximately $1.505 trillion.

Despite the premarket surge, AVGO has had a challenging start to 2026, down roughly 8.25% year-to-date versus the S&P 500’s modest gain of 0.35% over the same period. Investors have broadly grown cautious about whether AI infrastructure spending will generate sufficient returns, a sentiment that weighed on the stock even as its longer-term performance remains exceptional — up over 70% in the past year and an extraordinary 695% over five years.

The most recent analyst action came from RBC Capital on March 2, which maintained a Sector Perform rating while lowering its price target from $370 to $340, reflecting near-term valuation caution. From a fundamentals standpoint, Broadcom reported Q1 FY26 adjusted EPS of $2.05, narrowly beating the $2.03 consensus estimate, while revenue of $19.31 billion matched expectations.

The company’s trailing P/E stands at 66.71, with a forward P/E of 31.35 and a notably low PEG ratio of 0.87, suggesting the stock may be reasonably valued relative to its growth prospects. The average analyst price target sits at $455.51, implying significant upside from current levels, and the new $10 billion buyback program announced alongside earnings provides additional support for the share price going forward.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.