Q3 Revenue Exceeds Market Expectations, Stock Price Soars
Secures New $10 Billion Customer Order
US semiconductor company Broadcom has reignited its record-breaking rally by announcing a "surprise earnings" report for the third quarter of this year. In particular, revenue from its artificial intelligence (AI) segment surged by 63% year-on-year, driving the company's growth.
According to Bloomberg on September 4 (local time), Broadcom's revenue for the third quarter (May to July) reached $15.96 billion (22.2482 trillion KRW), marking a 22% increase compared to the same period last year. Earnings per share (EPS) also came in at $1.69, surpassing both market expectations compiled by London Stock Exchange Group (LSEG) of $15.83 billion in revenue and $1.65 in EPS. Net profit was $4.14 billion (approximately 6 trillion KRW), fully recovering from the $1.88 billion net loss posted last year due to the transfer of intellectual property to the US.
Notably, AI-related revenue ($5.2 billion) soared by 63% year-on-year, exceeding the company's own forecast of $5.1 billion. Broadcom projected that AI revenue in the fourth quarter would grow to $6.2 billion. In addition, semiconductor solutions revenue rose by 57% to $9.17 billion, while infrastructure software revenue increased by 43% to $6.79 billion, further strengthening the company's performance.
The market responded enthusiastically to these strong results. Broadcom closed at $306.10, up over 1% for the day, and jumped more than 4% in after-hours trading. Since the beginning of this year, the stock has surged by 32%, pushing the company's market capitalization above $1.4 trillion. CNBC explained the stock's rise by stating, "Investors are optimistic that Broadcom's custom processors could challenge Nvidia's dominant market share in the future AI chip market."
Hock Tan, Broadcom's Chief Executive Officer (CEO), stated during a post-earnings conference call that the company's revenue growth was driven by custom AI chips, networking components, and infrastructure software including VMware. He added that with continued active investment from customers, Broadcom expects to see growth for the eleventh consecutive quarter. The company estimated next quarter's revenue at $17.4 billion (approximately 24 trillion KRW), surpassing Wall Street's expectation of $17.02 billion.
Broadcom also announced the acquisition of a new customer. CEO Tan said, "We have secured a $10 billion order for custom AI chips (XPU) from our fourth customer," adding, "Explosive shipments are expected to begin in 2026." Previously, in March, CEO Tan revealed that Broadcom was developing new AI chips in collaboration with three major cloud customers and anticipated continued AI growth through next year.
Bloomberg commented, "Broadcom CEO Tan has been upgrading the company's networking equipment to improve data transfer between high-priced graphics chips, which are central to AI data centers," and added, "As his recent remarks indicate, Broadcom is also making progress in attracting customers seeking custom chips specialized for AI workloads."
Meanwhile, with Nvidia recently issuing a weak earnings outlook and competitor Marvell Technology's stock plunging 19% due to sluggish data center revenue, concerns about an AI bubble have emerged. This has led the market to focus on whether Broadcom's growth momentum can be sustained. MarketWatch reported, "Although there was welcome news that CEO Tan will remain in his position through 2030, and Broadcom is projecting 60% AI revenue growth next year, many experts believe the road ahead will be challenging."
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