Broadcom Shares Jump 6% Pre-Market on $100 Billion AI Forecast and Earnings Beat
Broadcom (AVGO) shares surged 6.42% in pre-market trading Thursday after the company delivered a fiscal first-quarter earnings beat and issued a massive long-term revenue target for its artificial intelligence business. The semiconductor leader now expects AI chip sales to surpass $100 billion by 2027, a projection that has reignited momentum across the chip sector ahead of the market open.
Record AI Growth Drives Quarterly Beat
Broadcom Inc. (AVGO) saw its stock price climb 6.42% in early trading ahead of the open on Thursday, March 5, 2026, as investors reacted to a stellar first-quarter earnings report released after the previous session's close. The company reported adjusted earnings per share (EPS) of $2.05 on revenue of $19.31 billion, surpassing analyst estimates of $2.03 and $19.18 billion, respectively.The primary engine of this growth was the company's AI semiconductor segment, which saw revenue skyrocket 106% year-over-year to $8.4 billion. This performance underscores Broadcom's critical role in providing the networking infrastructure and custom accelerators required for large-scale generative AI clusters. In the pre-market session, trading volume reached 565.5K shares, reflecting high conviction in the wake of the results.
The $100 Billion AI Roadmap
Perhaps the most significant catalyst for the pre-market surge was CEO Hock Tan's forward-looking commentary. During the earnings call, management stated they have a "line of sight" to exceed $100 billion in AI chip revenue by 2027. This ambitious target represents a massive leap from the $20 billion in AI sales reported for the full year 2025.Broadcom confirmed it has secured the necessary supply chain capacity through 2028 to support this scale. The company’s growth is being fueled by high-profile partnerships with "hyperscalers" including Google, Meta, and newer entrants like OpenAI and Anthropic. For the upcoming fiscal second quarter, Broadcom guided for AI chip revenue of $10.7 billion, a 140% increase year-over-year, significantly higher than the $8.2 billion the market had anticipated.
Capital Returns and Software Synergy
In addition to the fundamental growth, Broadcom's board authorized a new $10 billion share repurchase program through the end of 2026. This aggressive capital return strategy, combined with a quarterly dividend of $0.65 per share, signals management's confidence in the company's cash flow generation.On the software side, the integration of VMware continues to stabilize. While infrastructure software revenue grew only 1% in Q1 to $6.8 billion, the company issued upbeat guidance for Q2, expecting that segment to grow 9% to $7.2 billion as the transition to a subscription-based model gains traction.
Market Context and Outlook
Broadcom’s pre-market rally of 6.42% stands in sharp contrast to the broader S&P 500, which remained flat in early trading. Before today's move, AVGO shares had been down approximately 8.3% year-to-date, trailing peers like NVIDIA. Today's results appear to have closed that valuation gap, as analysts from firms like Jefferies and UBS noted that Broadcom has successfully made the case for its AI revenue to outgrow the broader market. Investors are now looking toward the opening bell to see if this momentum can trigger a broader recovery in the semiconductor sector.Key Takeaways
- AVGO shares rose 6.42% in pre-market trading following a Q1 earnings beat and bullish 2027 AI revenue targets.
- Management projects AI chip sales will exceed $100 billion by 2027, driven by custom silicon deals with OpenAI and Google.
- Q2 revenue guidance was set at $22 billion, significantly topping the analyst consensus of $20.56 billion.
- A new $10 billion share repurchase program was authorized, reinforcing a strong capital return profile.