Broadcom (AVGO) shares rose in after-hours trading as the chipmaker unveiled an optimistic forecast for the next fiscal year, driven by burgeoning business with AI leaders like OpenAI and Anthropic.
Despite a slightly softer revenue outlook for the current quarter, the company’s long-term earnings guidance exceeded expectations, underscoring its pivotal role in the AI hardware ecosystem. CEO Hock Tan highlighted significant growth in custom chip shipments and strategic partnerships, signaling a strong future in AI.
Broadcom (AVGO) shares saw a notable uptick in extended trading following the semiconductor giant's release of a robust forecast for the upcoming fiscal year. CEO Hock Tan emphasized the company's expanding footprint in the artificial intelligence sector, highlighting significant growth in collaborations with leading AI labs such as OpenAI and Anthropic.
Broadcom reported strong fiscal third-quarter results that surpassed analyst expectations. While the revenue forecast for the current quarter came in slightly below consensus, the company's long-range earnings guidance exceeded projections, signaling sustained profitability and growth.
- Earnings per share: $3.32 adjusted vs. $3.24 expected
- Revenue: $29.59 billion vs. $29.36 billion expected
For the upcoming fiscal fourth quarter, Broadcom anticipates revenue of $34.8 billion, a figure that falls short of the $35.03 billion projected by analysts. Despite this, the company's overall revenue experienced an impressive 86% surge year-over-year, reaching $15.95 billion from $15.95 billion in the previous year. Net income more than tripled to $13.09 billion, or $2.68 per share, a significant increase from $4.14 billion, or 85 cents per share, a year earlier.
Broadcom has cemented its position as a key beneficiary of the AI revolution, specializing in the design of custom chips for tech giants including Google (GOOGL), Meta (META), and OpenAI. The company's stock has seen a remarkable surge of over sixfold since the close of 2022, mirroring the ascendant trajectory of generative AI services like ChatGPT. This growth has propelled Broadcom's market capitalization to approximately $1.8 trillion.
However, Broadcom's stock performance has lagged behind broader market indexes this year. As of Wednesday's market close, the company's shares had appreciated by approximately 6% in 2026, while the S&P 500 index had climbed 12% over the same period.
During the quarter, Broadcom highlighted its custom Jalapeno chip, developed in collaboration with OpenAI. Additionally, Apple (AAPL) announced its intention to increase spending with Broadcom for U.S. chip production.
In a conference call, CEO Hock Tan revealed plans to accelerate shipments of Google's Ironwood tensor processing units (TPUs) to Anthropic and TPU 8i chips to Google. Broadcom is committed to delivering tens of billions of dollars worth of processors to Google annually for the next several years.
Tan also confirmed the continuation of Jalapeno shipments for OpenAI and expressed anticipation for production shipments of Meta's custom MTIA accelerator, optimized for large-scale inference and recommendation tasks. Broadcom anticipates Anthropic deploying 5 gigawatts of TPU 8i chips in 2027, with plans for an additional 10 gigawatts. OpenAI is reportedly preparing for the tape-out of its second-generation chip, with ongoing discussions for a third version.
Broadcom is projecting a 1.3 gigawatt deployment of Jalapeno in 2027, with expectations for over 5 gigawatts for both Jalapeno and its second generation. Looking ahead to the 2027 fiscal year, Tan aims to double AI revenue to $115 billion, with a further doubling to $230 billion projected for fiscal 2028. The company is also on track to achieve over $30 in earnings per share, surpassing the LSEG consensus of $25.86 for fiscal 2028 adjusted earnings per share.
Amie Thuener, Broadcom's finance chief, commented on the strategic importance of these investments, stating, "We are empowering two of our most strategic customers, the leading AI labs, to bridge the gap between their current cash flow and the significant upfront investments required for their businesses." She added that Broadcom might offer residual value guarantees as contingent liabilities to these labs, noting, "It makes economic sense for Broadcom to invest and enable these guys."
Semiconductor revenue surged to $16.7 billion, exceeding the StreetAccount average estimate of $15.2 billion. However, revenue from infrastructure software was $8.75 billion, slightly below the consensus of $8.82 billion.
