This article first appeared on GuruFocus.
Broadcom Inc. (AVGO, Financials) set a $19.1 billion revenue target for its first fiscal quarter of 2026 as demand for its AI semiconductor products continues to surge, creating a record $73 billion backlog that the company says will support growth well into 2026.
CEO Hock Tan said fiscal 2025 revenue grew 24% to a record $64 billion, fueled by a 65% jump in AI revenue to $20 billion. That strength helped lift the overall semiconductor segment and contributed meaningfully to the company’s results alongside VMware, which joined Broadcom’s portfolio earlier in the year.
Tan noted that while AI revenue growth may weigh on gross margins because of product mix, operating income is expected to rise due to scale and leverage across the business. He added that Broadcom is investing in a new advanced-packaging facility in Singapore to support expanding AI demand and reduce supply chain bottlenecks as orders accelerate.
The company’s AI backlog now gives Broadcom roughly a year and a half of visibility, positioning it to deliver steady growth as cloud providers and enterprise customers ramp up next-generation compute deployments.
Investors will look for updates in the next earnings cycle on how quickly Broadcom can convert its backlog into revenue and how margin trends evolve as AI continues to take a larger share of the business.