On the eve of the financial report, "launching satellites," JP Morgan: Broadcom's AI revenue will exceed $50 billion next year!

As Broadcom is about to release its financial report, JP Morgan has published a highly optimistic research report, reiterating its "Overweight" rating for the company.

According to news from the Wind Trading Desk, a report released on the 7th by JP Morgan analyst Harlan Sur's team predicts that Broadcom's AI revenue for the fiscal year 2026 is expected to exceed $50 billion. This astonishing growth forecast is primarily based on the continued ramp-up of Google's TPU project, new orders from clients such as Meta, and the launch of next-generation network chips.

For the upcoming October quarter (F4Q25) financial report, JP Morgan expects Broadcom's revenue and earnings per share to both exceed market consensus. The bank pointed out that the ongoing mass production of Google's TPU v6 (Ironwood) chip and strong demand for the Tomahawk 5 switching chip will drive Broadcom's AI revenue for the quarter to over $6.6 billion, higher than the market expectation of $6.2 billion.

Additionally, JP Morgan anticipates that Broadcom will provide a strong guidance for the January quarter, with revenue guidance potentially exceeding $19 billion, significantly higher than the market's general expectation of $18.5 billion. Analysts believe that as AI infrastructure spending continues to grow, Broadcom's leadership in custom chips and Ethernet switches will continue to translate into better-than-expected financial performance.

Next Year's AI Revenue Aiming for $50 Billion

In the report, JP Morgan is not only optimistic about short-term performance but also provides aggressive forecasts for Broadcom's medium- to long-term AI revenue trajectory. The report indicates that Broadcom is expected to achieve approximately $20 billion to $21 billion in AI revenue for the fiscal year 2025, representing a year-on-year growth of about 60%. Looking ahead to the fiscal year 2026, as new products and projects ramp up, this figure is expected to exceed $50 billion.

The main drivers of growth come from multiple aspects: first is the continuous iteration of Google's TPU project, with the current TPU v6 3nm (Ironwood) chip in mass production, and the next-generation TPU v7 3nm expected to ramp up in mid-2026.

Secondly, Meta's MTIA inference chip project is expected to ramp up in the first half of 2026. Additionally, the report reveals potential progress with new clients, noting that Softbank/ARM's XPU has just completed tape-out, and OpenAI's XPU ASIC has also received its first batch of chips, laying the foundation for future revenue explosions.

Financial Report and Guidance Expected to Exceed Expectations

Regarding the financial report set to be released this Friday, JP Morgan expresses strong confidence. The report predicts that Broadcom's total revenue for the October quarter will exceed $17.5 billion, primarily driven by strong orders for AI networks and custom ASICs. Although non-AI semiconductor businesses such as telecommunications, server storage, and broadband are only showing gradual improvement, the strength of the AI business is sufficient to offset the lackluster performance of other segments.

For the upcoming January quarter, JP Morgan expects AI revenue to reach $8 billion, far exceeding the market consensus of $6.8 billion. This forecast is based on the continued ramp-up of the Google TPU project and the Meta MTIA project, as well as strong demand for Tomahawk 5 and Jericho 3 AI network products. Meanwhile, the launch of the next-generation Tomahawk 6 chip is also seen as an important growth catalyst

Recovery of Non-AI Business and VMware Synergy

Outside of AI business, JP Morgan pointed out that Broadcom's traditional semiconductor business (broadband, storage, enterprise networking) is gradually improving with the recovery of cyclical trends. In terms of software infrastructure, VMware's business continues to maintain strong momentum. The report emphasizes that as large enterprise customers not only renew software contracts but also upgrade to the higher average selling price VCF full-stack solutions, VMware's revenue synergy is accelerating.

Analysts believe that the combination of strong AI fundamentals and aggressive synergies and value creation in the software business constitutes Broadcom's unique investment logic. As the world's second-largest AI semiconductor supplier, the largest custom AI ASIC supplier, and the largest cloud/AI network switch chip supplier, Broadcom not only benefits from the surge in AI infrastructure spending but also has diversified end-market exposure.

In addition to revenue growth, JP Morgan also highlighted Broadcom's top-tier profit margins and cash flow performance. The report forecasts that Broadcom will achieve strong double-digit free cash flow (FCF) growth, which will provide strong support for dividend growth in the coming years.

In this regard, JP Morgan expects Broadcom to announce a double-digit dividend increase during its earnings call. At the same time, strong cash flow will also support the company in continuing to deleverage, reducing interest expense burdens, and further enhancing profitability. Based on the above analysis, JP Morgan reiterated its "Overweight" rating on Broadcom