Broadcom's Q3 Revenue Surges 22% to $159.6B, Secures $100B AI Chip Order

Broadcom, a prominent ASIC chip manufacturer, has reported exceptional financial results for its third fiscal quarter, surpassing analyst expectations. The company's revenue for the quarter, ending August 3, reached 159.6 billion dollars, marking a 22% year-over-year increase and setting a new record high. This surpassed the consensus estimate of 158.3 billion dollars. The adjusted earnings per share stood at 1.69 dollars, beating the expected 1.65 dollars. Net income for the quarter was 41.4 billion dollars, or 0.85 dollars per share, a stark contrast to the net loss of 18.8 billion dollars, or 0.40 dollars per share, reported in the same period last year. The previous year's loss was primarily due to a one-time tax provision of 45 billion dollars related to the transfer of intellectual property to the United States. Free cash flow also reached a record high of 70 billion dollars, a 47% increase from the previous year.

Broadcom's strong performance was further bolstered by a surprise announcement during the earnings call. The company revealed that it had secured a 100 billion dollar custom chip order from a new client. This news was met with enthusiasm by investors, who saw it as a significant boost to the company's future prospects. The order is for Broadcom's XPU, a custom AI accelerator, and is expected to significantly enhance the company's AI revenue outlook for the 2026 fiscal year. The CEO highlighted that this new client, along with other potential large buyers, is driving the company's optimism for future growth. The CEO also mentioned that the company is in deep collaboration with several new potential clients to develop custom chips, indicating a robust pipeline of opportunities.

The company's AI semiconductor business has been growing at an accelerated pace, outpacing analyst expectations. For the fourth fiscal quarter, Broadcom projects AI semiconductor revenue to reach 62 billion dollars, surpassing the estimated 58.4 billion dollars. This growth is attributed to the increasing demand for AI solutions and the company's ability to deliver high-performance custom chips. The CEO expressed confidence that starting from 2026, the company's shipments will be robust, further solidifying its position in the AI chip market.

Broadcom's financial performance and strategic initiatives have positioned it as a formidable competitor in the AI chip market. The company's ability to secure large-scale orders and its focus on custom solutions are key factors driving its growth. As the demand for AI continues to rise, Broadcom is well-positioned to capitalize on this trend and challenge the dominance of other major players in the industry. The company's strong financial results and optimistic outlook for the future have instilled confidence among investors, who see Broadcom as a leader in the rapidly evolving AI chip market.