Broadcom Nears $2 Trillion as Custom AI Chip Margins Face a Ceiling

4 articles · Updated · Barchart · May 24

$1.98 trillion in market value leaves Broadcom priced for near-flawless growth, with the report arguing investors are overestimating how profitable its custom AI chip business can become.
Custom ASIC work for Alphabet, Meta, OpenAI and Anthropic is framed as a lower-margin co-development model: customers own the chip design and use Broadcom to cut infrastructure costs, limiting pricing power versus Nvidia-style GPUs.
Revenue reached $19.3 billion last quarter and annualized net income is about $29.4 billion, yet that still implies a roughly 67x-70x trailing P/E at current valuation.
Gross margin near 75.6% is tied largely to Broadcom's mature software assets and networking franchise, the report says, so a bigger mix of custom silicon could dilute overall profitability.
Shares above $400 therefore embed expectations that profits can roughly double within 24 months, setting up a potential reality check if actual AI-chip margins fall short.

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