Broadcom (NASDAQ:) Inc. continues to be a central player in the AI infrastructure build-out, and recent developments across the tech landscape may strengthen its growth outlook. Despite lingering market concerns about the pace and durability of AI-related spending, recent earnings season delivered a series of encouraging signals.
Several major technology firms reported strong momentum in their AI businesses, along with plans to maintain or increase capital expenditures tied to AI infrastructure.
These announcements matter for Broadcom. As a supplier of high-performance networking components and custom silicon that help power large-scale AI deployments, Broadcom’s fortunes are tightly linked to the investment cycles of its largest customers.
And while questions around competitive pressures and spending slowdowns have weighed on sentiment in recent months, investor response suggests a shift in tone: since the first of these earnings reports was released on April 24, Broadcom shares have climbed 7% through the May 6 close.
The rebound reflects growing confidence that AI infrastructure spending remains on track—and that Broadcom remains well-positioned to benefit.
AI Strength at Google & Meta Signal AI Strength for Broadcom
Two companies known as hyperscale customers of Broadcom are Alphabet (NASDAQ:), Google’s parent company, and Meta Platforms (NASDAQ:). Both companies posted strong results, largely due to the AI-centric parts of their business. Alphabet’s Google Cloud segment saw strong revenue growth of 28%. AI Infrastructure and Generative AI Solutions were key drivers of this increase. The company also confirmed its CapEx spending forecast. It plans to allocate $75 billion, much of which will go to AI infrastructure through calendar 2025. The company also said that, like Q4 2024, Cloud demand exceeded capacity this quarter, another sign that CapEx spending isn’t tailing off.
Meta also posted better-than-expected results. Its revenue grew at a solid 16% clip, and the price paid per ad increased by 10%. This indicates that the value of advertising on Meta’s apps continues to increase, likely driven by the AI investment the company is making. Meta also provided several examples showing that its AI investments are driving more engagement in its apps. Adding to the optimism around the AI story is the fact that the company actually increased its CapEx guidance for 2025 by 9%. The firm now expects to spend $68 billion at the midpoint.Both of these results are good signs for Broadcom. They show that these AI hyperscale customers are seeing their investment in the technology lead to tangible results. Amid concerns that AI spending could slow down due to the DeepSeek revelations, these companies are in no way signaling that this is actually the case. This is key for Broadcom, considering that big reductions in AI infrastructure spending would be very bad news for the stock. The fact that Broadcom shares sold off over 17% in just one day after the DeepSeek news broke evidences this.
Microsoft’s CapEx to Keep Growing: Could It Be Broadcom’s Next Customer?
Microsoft’s results also boost Broadcom’s confidence, but in a somewhat different way. Microsoft (NASDAQ:) reported a 33% increase in revenue from its Azure cloud business. AI is becoming a larger part of Azure’s growth. Three quarters ago, AI accounted for less than a quarter of the growth in Azure. That percentage has risen every quarter since. In the latest results, almost half of Azure’s growth came from AI.
Additionally, Microsoft reaffirmed its CapEx spending through the fiscal year ending in June at $80 billion. For the company’s next fiscal year, it has yet to release exact CapEx forecasts. However, the figure will be more than $80 billion. On the earnings call, the company said that compared to fiscal 2025 levels, “we expect CapEx to grow.” However, it did mention that the growth rate in CapEx would slow.
Microsoft isn’t a confirmed customer of Broadcom’s AI chips. Still, rising AI demand and growth CapEx support Broadcom’s investment case. It shows that investments in AI, which are a huge driver of revenue growth for Broadcom, are paying off. This means that hyperscalers are likely to keep spending on AI, providing a robust source of revenue for Broadcom. Aside from its current hyperscale customers, Broadcom is also in talks to develop custom AI chips for four other hyperscalers. At some point, news could break that Microsoft is one of these firms.
Amazon Adds to Optimism, Broadcom’s AI Demand Can Keep Humming
Further good news came from another hyperscaler, Amazon.com (NASDAQ:). The company noted its AI business is growing at triple digits from the previous year and referenced that demand still exceeds capacity.
The company didn’t change its CapEx guidance from $100 billion for calendar 2025. Amazon is not a Broadcom customer, but the reasons for optimism are similar to those related to Microsoft.
The AI-related news coming from these hyperscalers provides strong reassurance about Broadcom’s growth story. Seeing the AI train continue to chug along for some time is key to the success of Broadcom’s stock. Looking forward, it appears the engine will continue to see more coal shoveled into its firebox.
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