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Today's Featured Content
Big-Tech Earnings: Google and Meta's Results Support Broadcom's OutlookBy Leo Miller. Originally Published: 5/4/2026. 
Key Points
- Hyperscaler earnings are critical signals for downstream partners like semiconductor giant Broadcom.
- Google's explosive cloud sales and backlog growth show that Broadcom's top customer is only growing stronger.
- Google expects significant capital expenditure increases in 2027 while Meta left this as a possibility: positive signs for Broadcom.
- Special Report: Have $500? Invest in Elon’s AI Masterplan
Top hyperscaler companies reported earnings in the final week of April and received a mixed reaction from investors. The day after reporting, Google's parent company, Alphabet (NASDAQ: GOOGL), was the clear winner, rising about 10%. Amazon.com (NASDAQ: AMZN) climbed less than 1%, while Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) sold off, falling roughly 4% and 8.5%, respectively. With the exception of Amazon, a common theme among these companies was increased forecasts for artificial intelligence (AI) capital expenditure. For semiconductor giant Broadcom (NASDAQ: AVGO), the results from Google and Meta are central to its outlook because both partner with Broadcom to develop and deploy custom AI chips. Fortunately for Broadcom, Google’s and Meta’s results and outlook point to stronger demand ahead. Google: Broadcom’s Top Customer Crushes Earnings as Cloud Growth Soars
Google was the standout in the group, posting a strong sales beat and a massive earnings-per-share (EPS) beat. EPS came in at $5.11, nearly double the $2.64 analysts expected. A large portion of that EPS beat reflected a jump in Google’s “Other Income” line, which more than tripled year over year from $11.2 billion to $37.7 billion. That primarily reflected valuation gains in Google’s non-public equity investments in firms like SpaceX and Anthropic. Even excluding those investment gains, Google would still have reported an impressive beat. For Broadcom, Google’s outperformance matters because Google is a major custom chip partner, and Google Cloud—the segment that benefits Broadcom most—stole the show. Cloud revenues rose 63% to over $20 billion, the company’s fastest growth among its businesses. Google’s cloud backlog nearly doubled in one quarter to $462 billion. The deployment of tensor processing units (TPUs), the custom chips Google co-develops with Broadcom, will support much of this backlog. Google also plans to sell TPUs to select customers for deployment in their own data centers, creating an alternate source of demand for the chips. In short, Google Cloud is seeing strong demand, and Broadcom is directly tied to that growth. Google expects roughly 50% of its cloud backlog to convert into revenue over the next 24 months, suggesting demand for Broadcom’s TPUs should extend well beyond the near term. Meta Exceeds Expectations on Strong Advertising GrowthMeta also reported robust results, beating on revenue and EPS even after adjusting for unusual items. Revenue grew 33% year over year, the fastest pace since 2021 and above the company’s midpoint guidance of 30%. Broadcom helps Meta develop its Meta Training and Inference Accelerator (MTIA) chips, which power Meta’s ranking and recommendation (R&R) models that determine what content and ads users see. Meta’s advertising business grew at a pace not seen in years, and MTIA is a significant driver behind the models enabling that growth. Meta also plans to deploy future MTIA versions to support generative AI inference workloads—likely powering AI products that are still early-stage or not yet released. While details about those offerings remain limited, they represent an emerging source of demand that Broadcom can benefit from. 2027: Google Expects Significant CapEx Increase, Meta Makes Encouraging StatementsGoogle raised the midpoint of its CapEx guidance for 2026 by 4% to $185 billion, largely to account for its $4.75 billion acquisition of Intersect, so that adjustment doesn’t directly benefit Broadcom. More importantly, Google said “we expect our 2027 CapEx to significantly increase compared to 2026.” That is a clear positive for Broadcom, indicating its top customer plans to spend more in 2027 and supporting higher demand for TPUs and Broadcom’s AI networking solutions next year. Meta also raised its CapEx guidance for 2026 by 8% at the midpoint to $135 billion, but the company noted much of that increase is driven by higher memory chip prices—an area where Broadcom does not meaningfully benefit. Looking further out, Meta made remarks that are encouraging for Broadcom. On the earnings call, when an analyst asked for a preview of Meta’s 2027 CapEx, CFO Susan Li offered a revealing comment. Susan Li said: “Our experience so far has been that we have continued to underestimate our compute needs, even as we have been ramping capacity significantly as the advances in AI have continued and our teams continue to identify compelling new projects and initiatives, and now too there are very compelling internal use cases. Our expectation is that compute will become even more central to the business going forward.” That suggests demand for compute (and the chips that provide it) is likely to rise. Meta has a history of underestimating its needs and continues to find new AI opportunities, which leaves open the possibility of higher 2027 CapEx. Broadcom Maintains Its Stalwart Position in AITwo of Broadcom’s top customers outperformed on sales, with particularly strong forward-looking signals from Google. Google explicitly signaled increased spending in 2027, while Meta’s comments left the door open for further CapEx growth. Taken together, these are encouraging signs for Broadcom, indicating rising demand for its critical AI infrastructure solutions. |
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