Mizuho reiterated its Outperform recommendation on Broadcom after a meeting with the chipmaker's top executives, citing an accelerating pipeline of bespoke AI chip deals as a primary takeaway.
Analysts at the firm hosted Broadcom CEO Hock Tan, CFO Kirsten Spears, and Head of Investor Relations Ji Yoo for an investor call. Following that discussion, the brokerage said it left with greater conviction in Broadcom's AI revenue runway through 2027 and beyond.
Key commercial developments highlighted by Mizuho include a 3.5-gigawatt agreement connected to Anthropic's tensor processing unit, with deployments expected to begin in 2027. The analysts noted the understanding appears to cover only TPU v8 initially, with potential upside if subsequent TPU generations are adopted and trigger follow-on contracts.
Mizuho also flagged Broadcom's collaboration with Meta Platforms. The firm said Meta's expansion of its MTIA chip development and deployments extends through 2029, covers multiple chip generations and contemplates multi-gigawatt capacity additions. Mizuho estimated that Broadcom could see a benefit on the order of roughly $25 billion per gigawatt from these types of arrangements.
On the networking front, the brokerage emphasized a shift toward hybrid copper-optical architectures as next-generation AI racks scale. The analysts pointed out Broadcom is deploying 400G-800G per lane SerDes technology, allowing copper to handle short-reach rack connections while optical links scale for longer distances. That said, Mizuho warned that laser component supply remains a constraint and described the supply backdrop as staying "very tight."
Aggregating these developments, Mizuho reported that consensus AI revenue expectations for 2027 have risen. The analysts said consensus has climbed from about $100 billion in early 2026 to roughly $120 billion currently - a near 62% year-over-year increase from the earlier baseline.
The firm's own forecasts put AI-related revenues at $101 billion for fiscal 2027 and $132 billion for fiscal 2028, which Mizuho calculated as an 87% three-year compound annual growth rate.
Beyond the AI chip and networking businesses, Mizuho cited Broadcom's VMware infrastructure software segment as a complementary source of stability. The brokerage described VMware as a high-single-digit to low-double-digit long-term grower that operates at approximately 80% operating margins.
The analysis also referenced valuation tools that can be used to assess whether AVGO shares present an attractive entry point, noting the use of multiple industry valuation models to derive fair value estimates.