Citi Sees Broad Raising Its AI Business Share to Over 80% in Four Years

Citigroup raised its price target for Broadcom from $475 to $500 ahead of the company's earnings release on June 3rd, reiterating its buy rating. Analyst Atif Malik pointed out that strong AI demand will drive the company's second-quarter results to exceed expectations, with AI-related revenue expected to grow from its current 49% to 81% of total revenue by the end of fiscal year 2028.

The core details show that Broadcom's combined AI sales from Google and Anthropic are expected to reach $80 billion in 2027, while the company's total annual AI sales are projected to reach $115 billion. As the partnership model with Anthropic shifts from cabinet shipments to more profitable chip shipments, Broadcom's gross margin is expected to improve further.

For investors, Broadcom's dominance in the custom AI chip market is consolidating. In addition to the publicly known Google, Meta, and OpenAI, the market speculates that ByteDance is also one of its key customers. Broadcom is currently negotiating with three other potential clients, which means there is still a huge expansion space for its custom chip (ASIC) business.

The next focus will be on the earnings conference call in early June, where the market will closely follow the progress of new customer agreements and whether the actual growth rate of AI business revenue meets Citi's high growth expectations.