Broadcom Stock Rises on Strong AI-Fueled Earnings and Outlook
The chipmaker reported a 63% year-over-year surge in AI revenue and provided a strong forecast, signaling continued momentum in the sector.
Broadcom Inc. (NASDAQ: AVGO) saw its stock rise in after-hours trading after the company that surpassed analyst expectations, driven by explosive growth in its artificial intelligence chip business.
The technology giant announced third-quarter revenue of $16 billion, a 22% increase from the prior year, with an adjusted earnings per share of $1.69. The performance was significantly bolstered by its AI division, which saw revenue accelerate by 63% year-over-year to $5.2 billion. This marks the tenth consecutive quarter of strong growth in the segment, highlighting the surging demand for technologies that power AI.
In the company's earnings announcement, CEO Hock Tan stated, "Broadcom achieved record third quarter revenue on continued strength in custom AI accelerators, networking and VMware. Q3 AI revenue growth accelerated to 63% year-over-year to $5.2 billion." The company also revealed it has secured a fourth major customer for its custom AI accelerators, a move expected to significantly boost AI revenue in fiscal year 2026.
The company's positive momentum is set to continue, with , an increase of 24% year-over-year. Revenue from AI semiconductors alone is projected to reach $6.2 billion in the upcoming quarter. This strong outlook reflects the company's strategic position in the booming AI market and its successful integration of VMware, which has strengthened its infrastructure software offerings.
While the AI segment powers ahead, the company noted that its non-AI semiconductor business is experiencing a slower recovery, though it expects sequential growth in the fourth quarter driven by seasonality in broadband, server storage, and wireless. The company's infrastructure software segment, which includes the recently acquired VMware, also performed well, posting revenue of $6.8 billion, a 17% year-over-year increase. Investors reacted positively to the news, with following the announcement.