Broadcom reports strong Q3, sees AI chip revenue accelerating in Q4

Broadcom continued to ride demand for its AI custom accelerators in the fiscal third quarter with revenue growth of 86%.

The company reported third quarter earnings of $2.68 a share on revenue of $29.6 billion, up 86% from a year ago. Non-GAAP earnings were $3.32 a share.

Wall Street was expecting Broadcom to report non-GAAP earnings of $3.24 a share on revenue of $29.43 billion.

Broadcom projected fourth quarter revenue of $34.8 billion, up 93% from a year ago.

CEO Hock Tan said, "demand for our custom AI accelerators and networking continues to be very strong" and AI semiconductor revenue will accelerate to $21.7 billion.

By unit, Broadcom's chip unit is now 70% of revenue with its infrastructure software business, led by VMware, accounting for the remainder.

VMware Explore this week featured a heavy dose of private AI deployments, wrangling AI agents and tokenomics. Here's the news announced by VMware.

• VMware Private AI Cloud
• VMware AI Factory
• VMware adds models to Private AI Cloud
• Broadcom launches AgentMinder

On the conference call with Wall Street analysts, Tan was bullish on the AI chip business and said shipments of Google's TPU, shipments of Google's Ironwood TPU for Anthropic and OpenAI and Meta custom chips are all ramping. Here's what he said:

• "During the quarter, we delivered Ironwood TPU v7, version 7 in high volume to both Anthropic and Google. At the same time, we began production shipments of the next-generation TPU version 8i for Google. This new TPU generation has been designed with more memory and bandwidth compared to Ironwood, and just like Ironwood, is optimized for inference workloads. And in performance, it is comparable, if not surpasses the Vera Rubin GPU. Just to reiterate the major technology challenges of developing these complex accelerators, Broadcom is now shipping the TPU version 8i ahead of the MediaTek version v8t, which, in fact, was initiated earlier."
• "In Q3, we also shipped Jalapeno, OpenAI's first-generation custom accelerator, which outperforms Grace Blackwell GPU for inference workloads. Overall, our XPU shipments for the third quarter were up over 3.5x year-on-year and represented 73% of AI revenue during the quarter. Our AI networking revenue was up over 2.5x year-on-year. And this strong momentum continues into Q4."
• "During the quarter, we expect to accelerate shipments of Ironwood to Anthropic. We also expect to ramp up high-volume shipments of the TPU version 8i to Google. Shipments of Jalapeno for OpenAI will continue. And for Meta, we expect production shipments of their custom MTIA accelerator optimized for inference and recommendation at scale."
• "Reflecting our excellent progress with this key group of LLM customers, here is our outlook for our AI semiconductor revenue. In 2027, we have secured the supply to again double AI revenue to approximately $115 billion. Our demand actually exceeds this outlook, and we will work to improve supply. In 2028, we expect the trajectory of growth to continue. We have line of sight for fiscal 2028 AI semiconductor revenue growth to again double to $230 billion. Here again, we have secured the supply to meet this outlook. This AI revenue guidance through '28 is being provided to give you the trajectory of our growth. That demand for compute continues to be extremely strong."