Broadcom's core strategy and custom chip pipeline remain strong for the next two years, with expected high revenue growth, but stock performance depends on clarifying TPU exposure and customer commitments.

We are now looking at Broadcom, which has fallen by about half a percent. Broadcom, as you know, we were always talking about the Magnificent Seven. She was more like an eighth honorary member.

I say that Broadcom will achieve good results. I mean, you're looking at a figure where revenues will grow by more than 80% this quarter compared to last year. I expect the strength to continue here as we enter the October quarter, and I think expectations have risen somewhat for Broadcom.

So, to some extent, there will be expectations on this call that Broadcom will offer more to the investment community. Whether or not Broadcom provides additional details will essentially determine the stock's performance after the results.

But ultimately, the core strategies remain very strong when looking at their custom chip pipeline over the next two years. She expects the overall trajectory to look very good.

I would say that we want more clarity regarding the exposure to the processing units (TPUs) from Google's operations. It is clear that Google is expanding its supply chain. So, we want to make sure that Broadcom is still firmly established there, and we believe it is.

And anything they say regarding financing commitments and the like is likely another area of concern for investors, given the high interest rate environment and so on. Yes, because you just talked about Google and there were questions about whether the CEO, Hock Tan, would actually talk about AI customers and the competition in that field, which was also mentioned in connection with Google's custom chip business.

I think the most important aspect of this call will not be the high probability of exceeding expectations and raising targets, because I think that has become almost expected at this time.

And I think it's also important to remind everyone that when you actually look at the peak of the semiconductor trade, it actually happened when Broadcom announced its latest earnings results, didn't it?

That was the time when Hock Tan came out and delivered good results and good guidance, but he did not deliver that quarter that involved a significant overshoot of expectations and a raising of targets as people were used to seeing it. So, that was the peak of trading at that time.

As we head towards this earnings call, it's clear that expectations have lowered somewhat, meaning the stock's performance hasn't been good. The price-to-earnings ratio has shrunk considerably.

Looking back, perhaps what people want to hear on this call regarding the product line, whether it's for companies like Anthropic or Google, is reassurance that these existing customers will continue to increase their spending with them.

I mean, you're talking about $50 to $55 billion this fiscal year. They have provided guidance in excess of $100 billion for next year, but market estimates are likely around $120 billion.

So, they would like to see something closer to $150 billion or something like that. Therefore, we would like to hear some clarification on this point.

As for the competition, yes, the competitive landscape is getting fiercer in the custom silicon side, but it is also important to note that the custom silicon market as a whole is growing, and we believe it will grow bigger and faster than the broader GPU market and the accelerator field in general over the next two years.

There is a lot of confidence in Hock Tan and in this CEO, but I am thinking long-term about whether the company is really able now to move from these large models to running AI applications on a large scale.

The company may also face some risks. I have mentioned some risks here as well.

I think it's rather difficult to use that as a selling point for Hock Tan and the custom chip market in general. However, I would say this: when you think about any large cloud service provider, they are somewhat keen to diversify their sources away from Nvidia's GPUs.

This is where Broadcom really benefits, being the largest supplier of custom silicon chips right now.

However, I believe the biggest risk is the trajectory of future projects, and whether Anthropic and perhaps to a greater extent OpenAI will be able to meet their commitments to Broadcom by 2027 and 2028.

I was also looking at the same target price. I lowered it from 525 to 450 based on your analysis, but most people still consider this stock a favorite. From 369 to 450, you still have a "buy" rating.

This still shows the potential for an upward move.

Tell us more about your own analysis and how you arrived at this figure of $450 as a 12-month target price.

Yes, and I think that's a good question. So, the way we've looked at the semiconductor landscape, and I would say over the last few weeks and months, and I think this is a really important earnings season, is that we've now passed, I would say, the peak of growth in the semiconductor industry.

This is a really important point, because I would say that in the second quarter we saw growth exceeding 120% on an annual basis. We haven't seen anything like this or anything close to it in the last fifteen or twenty years.

If you look beyond the financial crisis, you'll find that the semiconductor industry in the first quarter of 2010 grew by slightly more than 50% year-on-year, which tells you the scale of what we're seeing right now, starting from what we call the third year of the current bull run.

Therefore, we are witnessing exceptional strength. Much of this strength at this time comes from a very strong pricing environment. Therefore, growth rates here will slow down over the next few quarters and years.

Does this necessarily mean that you are at your peak? But equally, I think you should squeeze some of the multiples a little, as investors may now be looking to what the other side of the cycle might look like, and the sustainability of the current environment, which is why we have lowered our multiples.

Oh, past peak growth, I think that's very interesting. So, slower growth, there is still growth, and there is still demand for artificial intelligence, but at a slower growth rate.

Broadcom clearly has a huge footprint here; it's one of the largest in the world.

Is this correct? Yes, I mean I think you should do it at this time. I really think you should squeeze the complications a little bit. I think this makes sense. But again, it is one of those things where the earnings trajectory is still fairly strong in nature.

Good. Angelo Zeno, it's a pleasure to see you. Now, we'll just have to wait and see the figures released by Broadcom. Thank you very much for this conversation.