Broadcom Stock Soars to New High on CEO’s Surprising AI Chip Outlook

Broadcom reports earnings after the close on Thursday. (Justin Sullivan/Getty Images)

Broadcom stock surged to a new high after the chip maker announced on its earnings call that it has won an order from a new customer, and the company’s CEO gave a bullish multi-year outlook for its artificial-intelligence semiconductor business.

For its fiscal third quarter, the company reported revenue of $15.95 billion versus the Wall Street consensus of $15.8 billion, according to FactSet. Adjusted earnings came in at $1.69 per share, which is above analysts’ consensus estimate of $1.66 per share.

Created with Highcharts 9.0.1BroadcomSource: FactSetAs of Sept. 5, 4 p.m. ET

Created with Highcharts 9.0.1April 2025Sept.125150175200225250275300325$350

Guidance was solid. For the current quarter, Broadcom guided to $17.4 billion in revenue, compared to analysts’ expectations of $17 billion.

“Broadcom achieved record third quarter revenue on continued strength in custom AI accelerators, networking and VMware,” Broadcom CEO Hock Tan said.

Shares of Broadcom rose 14% to $350 in early Friday trading. The company is currently trading at a valuation of $1.61 trillion, its highest on record.

On the earnings call, Tan announced Broadcom had secured $10 billion in AI orders from a new qualified customer, which he believes will “significantly” improve the AI revenue outlook for fiscal 2026.

Multiple Wall Street analysts said they believe the new customer is ChatGPT-developer OpenAI, which didn’t immediately respond to a Barron’s request for comment.

Broadcom shares rose higher in premarket trading after a report from Bernstein analyst Stacy Rasgon said that Tan gave additional positive commentary about Broadcom’s business prospects in fiscal 2027 in a separate call. “On the callback, CEO Hock Tan suggested that FY27 AI sales might even accelerate further (at which point the numbers start to get staggeringly large, and eerily reminiscent of the AI ramp observed at their primary GPU competitor over the last few years,” Rasgon wrote in a note to clients Friday.

The analyst reaffirmed his Outperform rating on Broadcom shares and raised his price target for the stock to $400 from $295.

Broadcom’s semiconductors compete in several categories, including networking, broadband, server storage, wireless, and industrial. The company is also a leader in the market for high-end artificial intelligence application-specific integrated circuits, or AI ASICs. It helps large technology companies design custom chips for AI.

Write to Tae Kim at tae.kim@barrons.com and Adam Clark at adam.clark@barrons.com