Broadcom Inc. announced a strategic shift on Monday, June 29, 2026, moving away from its traditional acquisition-centric approach to focus on organic artificial intelligence development.
The decision follows a 26% decline in the company's stock from its all-time high.
>>> Manchester City Appoints Enzo Maresca as New Manager on Three-Year Deal
CEO Hock Tan stated that booming AI infrastructure demand is generating stronger returns than potential acquisitions.
The company is concentrating on supplying networking gear and custom accelerators, projecting this segment could exceed $100 billion in revenue by fiscal 2027.
"Artificial intelligence revenue is surging," Tan said.
He explained that large deals can distract both the corporation and its clients during this expansion phase, adding, "What can I buy that would come close to that?"
Despite a sharp drop in share prices following lower-than-expected infrastructure software revenue of $7.18 billion, market demand for AI hardware remains "almost insatiable," Tan noted.
Wall Street analysts observed highly volatile trading after the company's fiscal second-quarter earnings report on June 3.
Concerns also arose regarding Broadcom's relationship with Google parent Alphabet, its largest custom chip client, as the tech giant seeks to diversify its tensor processing unit partnerships.
>>> Winter Storm Brings Heavy June Snow to Northern Rocky Mountains
"Given the growth of consumption and development and consumption of AI compute, even by our partner, Google, that we fully expect that there will be some diversity of sources for them," Tan said.
JPMorgan analyst Harlan Sur defended Broadcom, maintaining a $580 price target and stating that a recent five-year agreement secures Broadcom's TPU design roadmap through the v11 generation.
Sur pushed back against claims that the upcoming TPU v9 program faces delays.
Broadcom reported a 48% year-over-year increase in total revenue to $22.2 billion for the second quarter, driven primarily by a record $10.8 billion in AI semiconductor revenue.
Tan highlighted record revenue, operating profit, and free cash flow in Q2.
On June 24, the company announced a partnership with OpenAI to develop the custom Jalapeño LLM inference chip platform.
>>> Bob Maaskant, Creator of 'Avondje NAC', Dies at 88
Tan added, "The momentum continues, and in Q3 we expect semiconductor revenue from AI to grow over 200% year-over-year to $16.0 billion."
