- Lead. Broadcom reported $29.6 billion in Q3 revenue — up 85% year-on-year — with AI chip sales alone reaching $16.7 billion, triple the level of a year earlier.
- Fact. The company guided to $34.8 billion in Q4 revenue and forecast $58 billion in AI semiconductor revenue for the full fiscal year 2026, scaling to $115 billion in 2027 and $230 billion in 2028.
- Stake. Broadcom’s numbers confirm that Nvidia’s dominance is being partially absorbed by a wave of custom silicon spending at hyperscalers, with six named XPU customers now generating the bulk of its AI revenue.
Broadcom reported fiscal third-quarter results on September 2 that beat Wall Street targets across every major metric, according to Yahoo Finance. Total revenue hit $29.59 billion, up 85% from $15.95 billion in the same period a year ago. Adjusted earnings per share reached $3.32, nearly double the $1.69 posted in Q3 fiscal 2025. The results extended the company’s run of consecutive earnings beats and pushed its trailing twelve-month free cash flow to new highs.
The AI Chip Engine
AI semiconductor revenue of $16.7 billion grew 221% year-on-year and 54% from the prior quarter, making it the fastest-growing segment in the company’s history. Total semiconductor revenue across all product lines reached $20.8 billion, up 127%, while infrastructure software — the legacy VMware and mainframe management business — contributed $8.8 billion, up 29%. Free cash flow for the quarter was $13.7 billion. The AI numbers are driven by Broadcom’s custom accelerators, known as XPUs, which are designed with and for specific hyperscale customers rather than sold as general-purpose GPUs. Broadcom had already lined up $60 billion in debt financing earlier this year to fund the infrastructure required to meet this demand.
The Six XPU Customers
Broadcom confirmed that six XPU customers — a group that includes Google, Anthropic and OpenAI alongside three others the company has not publicly named — are now generating the bulk of its AI semiconductor revenue. The custom chip model gives hyperscalers lower cost-per-watt than merchant silicon for specific workloads, and gives Broadcom longer-duration revenue commitments than the spot market. The company’s forward guidance illustrates the trajectory: $21.7 billion in AI chip revenue in Q4 (up 236% year-on-year), and full-year 2026 AI revenue expected to reach $58 billion, climbing to $115 billion in 2027 and $230 billion in 2028.
The Guidance Miss and Its Context
The one note of friction: Broadcom guided to $34.8 billion in Q4 total revenue, marginally below the analyst consensus of $35.03 billion. While the variance is small relative to the magnitude of the beat in Q3, it proved enough to move the stock in after-hours trading. Seeking Alpha noted that investors in AI hardware names have set expectations so high that even outstanding results invite scrutiny of any forward figure that falls short. The company did not revise its multi-year AI revenue forecast downward — the $115 billion and $230 billion projections for 2027 and 2028 remained unchanged — and the quarterly guidance shortfall was attributed to the timing of customer programme milestones rather than demand weakness.