Broadcom Q3 Earnings Call Highlights

Broadcom NASDAQ: AVGO reported record third-quarter fiscal 2026 revenue, operating income and free cash flow, driven by sharply higher demand for artificial intelligence semiconductors and custom AI accelerators. Revenue rose 86% year over year to $29.6 billion, while operating income increased 92% to a record $20.1 billion. Non-GAAP diluted earnings per share grew 96% from a year earlier to $3.32. The company generated record free cash flow of $13.7 billion, equal to 46% of revenue. We delivered an exceptional quarter with revenue, operating income and free cash flow all exceeding prior records, President and CEO Hock Tan said. He said AI semiconductor revenue grew 221% year over year and 54% sequentially to $16.7 billion during the quarter. Broadcom’s Semiconductor Solutions segment produced record revenue of $20.8 billion, up 127% year over year and accounting for 70% of consolidated revenue. AI semiconductor revenue represented 56% of total company revenue, compared with 49% in the preceding quarter. Tan said the company’s XPU shipments rose more than 3.5 times from a year earlier and represented 73% of AI revenue in the third quarter. AI networking revenue increased more than 2.5 times year over year. During the quarter, Broadcom delivered high-volume shipments of Ironwood TPU v7 to Anthropic and Google, while beginning production shipments of Google’s next-generation TPU v8i. It also shipped Jalapeño, OpenAI’s first-generation custom accelerator. Tan said Broadcom expects production shipments of Meta’s custom MTIA accelerator in the fourth quarter. Tan said the company believes custom accelerators can offer superior performance, cost and power characteristics for customers’ specific large-language-model workloads. He also described Jalapeño as outperforming Grace Blackwell GPUs for certain inference workloads, citing OpenAI’s announcement, and said it was comparable to Vera Rubin GPUs in running OpenAI workloads. For the fourth quarter, Broadcom forecast consolidated revenue of approximately $34.8 billion, up 93% year over year. It expects semiconductor revenue of about $26.1 billion, including $21.7 billion in AI semiconductor revenue, which would represent growth of more than 236% from the prior-year period. Infrastructure software revenue is expected to be approximately $8.7 billion in the fourth quarter, up 25% year over year. Broadcom expects consolidated operating margin of about 66%. Fiscal third-quarter AI semiconductor revenue: $16.7 billion Fiscal fourth-quarter AI semiconductor revenue forecast: $21.7 billion Fiscal 2026 AI revenue forecast: $58 billion, up 186% year over year Fiscal 2027 AI reve...