Broadcom’s AI chip revenue grows 221% in last quarter

Broadcom just posted fiscal third-quarter results that make even the most optimistic AI bulls do a double-take. AI semiconductor revenue hit $16.7 billion for the quarter ended August 2, a 221% increase year-over-year and a 54% jump from the prior quarter alone.

That AI segment now represents roughly 56% of the company’s total revenue, which came in at $29.6 billion, up 86% from the same period last year.

The numbers behind the pivot

Broadcom’s semiconductor solutions category, the broader bucket that houses its AI products, generated $20.8 billion in revenue. That’s a 127% increase year-over-year, driven almost entirely by surging demand for custom AI accelerators and networking products.

The company’s remaining performance obligations stood at approximately $179.2 billion as of August 2, up from $164.6 billion the prior quarter.

The client roster reads like a who’s who of AI spending. Alphabet, Anthropic, OpenAI, and Meta Platforms are all major customers, each hungry for the custom AI accelerators, known as XPUs or ASICs, that Broadcom specializes in designing.

Forward guidance that keeps climbing

Management raised full-year fiscal 2026 AI revenue guidance to approximately $58 billion.

For Q4 specifically, Broadcom expects AI semiconductor revenue of about $21.7 billion, which would represent a 236% increase from the year-ago quarter. Total Q4 revenue is projected at roughly $34.8 billion.

Broadcom is forecasting AI revenue of around $115 billion for fiscal 2027 and approximately $230 billion for fiscal 2028.

Market reaction was surprisingly muted

Despite the blockbuster numbers, the stock market’s response was mixed. Some investors reportedly focused on cautious elements within the guidance rather than the headline growth figures.

The $14.6 billion increase in remaining performance obligations over a single quarter signals that new contracts are being signed at a pace that outstrips even the rapid revenue recognition.

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