Broadcom’s AI chip boom powers record quarter, shares waver
1/6
Broadcom’s AI boom hits another gear
Broadcom delivered a strong fiscal third-quarter performance, with revenue jumping 86% year-on-year to $29.6 billion. Surging demand for custom AI accelerators and networking chips drove the results. (Sources: Broadcom, Reuters, Wall Street Journal, Yahoo Finance)
2/6
AI revenue soars 221%
Broadcom’s AI semiconductor revenue surged 221% year-on-year to $16.7 billion in the quarter. The company expects AI semiconductor revenue to accelerate further to $21.7 billion in Q4, up 236% from a year earlier.
3/6
$230 billion AI opportunity
Broadcom sees its AI semiconductor business reaching $115 billion in fiscal 2027 and potentially doubling again to around $230 billion in 2028. The outlook reflects rapidly expanding AI infrastructure spending by major technology companies.
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4/6
OpenAI, Google, Anthropic drive demand
Broadcom is benefiting from demand for custom chips from leading AI developers, including OpenAI, Anthropic and Google, while Meta is also expected to begin receiving Broadcom custom chips. The company says it has visibility into major AI deployments extending through 2028.
5/6
Why did the stock fall?
Despite beating expectations, Broadcom shares came under pressure after the results. The key concern was its $34.8 billion Q4 revenue forecast, which was only slightly above or below some analyst estimates depending on the data set, leaving investors looking for a bigger upside surprise.
6/6
Strong numbers, high expectations
Broadcom's adjusted earnings came in at $3.32 per share, ahead of the $3.22 analyst estimate, while Q3 revenue also topped expectations. But with AI expectations already extremely high, investors appear to be demanding even stronger guidance and evidence that Broadcom can sustain its rapid AI growth.