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Broadcom is trading sharply higher (+10%) after delivering a strong Q3 (Jul) earnings report, fueled by accelerating AI semiconductor growth and bullish long-term commentary. The company topped EPS and revenue expectations and guided Q4 (Oct) revenue above consensus.
- Total Q3 revenue grew +26% yr/yr to $9.17 bln, beating prior guidance of ~$9.1 bln.
- AI semiconductor revenue surged +63% yr/yr to $5.2 bln, ahead of $5.1 bln guidance. Broadcom expects AI semiconductor revenue to rise further to $6.2 bln in Q4 (+66% yr/yr).
- Backlog hit a record $110 bln, driven by strong AI bookings.
- While AI demand boomed, non-AI semiconductor revenue (~$4 bln) was flat sequentially, with mixed trends across segments.
Management did not offer specific FY26 guidance but stated AI growth in FY26 will accelerate meaningfully vs FY25. A major driver: the addition of a fourth large customer—speculated to be OpenAI—joining the three existing XPU clients. Production orders from this customer contributed to the $10 bln in AI racks already secured.
In corporate news, Broadcom announced that CEO Hock Tan will remain through at least 2030, signaling leadership stability during this high-growth AI phase.
Briefing.com Analyst Insight:
Q3 results were solid, but the real story is the growing AI tailwind and management's confidence in even stronger AI momentum into FY26. The addition of a possible fourth marquee customer and a record $110 bln backlog give Broadcom rare visibility into long-term demand. With AI custom silicon and networking at the core of its growth story, AVGO remains a critical name in the AI supply chain. That said, non-AI demand remains sluggish, which could weigh if AI momentum slows.
