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Broadcom’s Meteoric Rise in the AI Era

Broadcom shares have nearly doubled in the past 12 months, cementing the company’s position at the heart of the artificial intelligence boom. The stock jumped again in after-hours trading following news that the company had secured $10 billion in custom chip orders from a previously unnamed client.

The deal strengthens Broadcom’s growing reputation as a critical supplier for hyperscale cloud providers like Google, Microsoft, and Amazon. With Wall Street increasingly betting on AI infrastructure as the next trillion-dollar opportunity, Broadcom is now seen as one of the few players with the scale to challenge Nvidia’s dominance.

Earnings and Guidance Exceed Expectations

The company’s fiscal third-quarter results came in well above consensus estimates:

• Earnings per share (adjusted): $1.69 vs. $1.65 expected
• Revenue: $15.96 billion vs. $15.83 billion expected

Broadcom also lifted its fourth-quarter guidance, forecasting $17.4 billion in revenue, beating analyst expectations of $17.02 billion. This represents a 22% year-over-year jump, driven by soaring demand for AI-focused chips and networking products.

Net income for the quarter hit $4.14 billion, or 85 cents per share, a major turnaround from the $1.88 billion net loss in the same quarter last year, which was caused by a one-time $4.5 billion tax provision linked to intellectual property transfers.

AI Chips Take Center Stage

Broadcom’s growth is being powered by its custom AI accelerators, networking solutions, and VMware software suite. AI-related revenue surged 63% year-over-year to $5.2 billion, surpassing the company’s own forecast of $5.1 billion. For the upcoming quarter, Broadcom expects AI revenue to reach $6.2 billion.

CEO Hock Tan revealed that the company had secured $10 billion in production orders for its next-generation AI processors, called XPUs, from a fourth major customer. Shipments are expected to begin scaling strongly in 2026.

This customer joins Broadcom’s existing roster of tech giants, and analysts believe the mystery buyer could be another hyperscale cloud provider seeking to diversify its supply chain away from Nvidia.

Strength Across Business Segments

Broadcom’s semiconductor solutions segment, which includes AI chips, delivered a 57% increase in revenue to $9.17 billion. Its infrastructure software division, which now includes VMware following its acquisition, grew 43% to $6.79 billion. Together, these results highlight the company’s ability to generate growth across hardware and software ecosystems.

Market Valuation and Investor Outlook

Broadcom’s stock has risen 32% year-to-date and has almost doubled in the past year, pushing its market capitalization above $1.4 trillion. The surge has been fueled not only by its AI momentum but also by investor confidence that Broadcom’s diversified business model makes it less vulnerable to the cyclical downturns that typically affect semiconductor firms.

With AI revenue expected to climb sharply in the coming quarters and new billion-dollar deals in the pipeline, many analysts are now suggesting Broadcom could become the most significant challenger to Nvidia’s AI chip dominance. Investors are watching closely as the company ramps production and builds on its strong positioning in the AI supply chain.