Broadcom shares rose after the chipmaker released a positive outlook for the next fiscal year and indicated increasing collaboration with artificial intelligence labs.
Broadcom’s Q3 Highlights
- Revenue of $29.6 billion for the third quarter, up 86 percent from the prior year period
- GAAP operating income of $16.0 billion for the third quarter; Non-GAAP operating income of $20.1 billion for the third quarter
- GAAP diluted EPS of $2.68 for the third quarter; Non-GAAP diluted EPS of $3.32 for the third quarter
- Cash from operations of $14.2 billion for the third quarter, less capital expenditures of $0.5 billion, resulted in $13.7 billion of free cash flow, or 46 percent of revenue
- Quarterly common stock dividend of $0.65 per share
- Fourth quarter fiscal year 2026 revenue guidance of approximately $34.8 billion, an increase of 93 percent from the prior year period
- Fourth quarter fiscal year 2026 Non-GAAP operating income guidance of approximately 66 percent of projected revenue
Net income surged over threefold to $13.09 billion, or $2.68 per share, compared to $4.14 billion, or 85 cents per share, the previous year.
In Q4, Broadcom said it expects revenue of $34.8 billion, while analysts were expecting $35.03 billion.
Hock Tan, President and CEO of Broadcom Inc. told investors: “Demand for our custom AI accelerators and networking continues to be very strong. Q3 AI semiconductor revenue of $16.7 billion grew 221% year-over-year, and 54% quarter-over-quarter,. In Q4 the momentum continues, and we expect AI semiconductor revenue to accelerate to $21.7 billion, up 236% year-over-year.”
“Broadcom achieved record revenue, operating profit and free cash flow in Q3. We delivered non-GAAP operating income growth of 92% year-over-year, as consolidated revenue grew 86% year-over-year to $29.6 billion,” said Amie Thuener, CFO of Broadcom Inc. “Q4 consolidated revenue growth is forecasted to increase 93% year-over-year to $34.8 billion, and we expect to maintain our non-GAAP operating margin at 66%, flat from a year ago.”
Broadcom has emerged as a key beneficiary of the AI surge, developing custom chips for companies like Google, Meta, and OpenAI. Its stock price has more than doubled since late 2022, amid the rise of ChatGPT and other generative AI platforms, pushing its market capitalization to roughly $1.8 trillion.
CEO Hock Tan stated during a conference call that Broadcom plans to accelerate shipments of Google Ironwood tensor processing units to Anthropic and TPU 8i chips to Google. He added that shipments of Jalapeno for OpenAI will continue, and they expect to send production quantities of Meta’s custom MTIA accelerator, designed for large-scale inference and recommendation tasks.
For fiscal 2027, Tan aims to double its AI revenue to $115 billion, then double it again to $230 billion in fiscal 2028.
By CEO NA Editorial Staff
