Broadcom beat Wall Street’s expectations for its fiscal third quarter, reporting adjusted earnings of $3.32 per share against a $3.24 forecast, and revenue of $29.59 billion versus the $29.36 billion analysts had penciled in. On paper it was a clean beat. In practice, the margin was thin enough that the stock still took a hit after the numbers came out Wednesday evening, because guidance for the next quarter fell short of what investors were hoping for.
Broadcom’s forecast for the current quarter came in at $34.8 billion, below consensus estimates, and shares dropped roughly 4% in the aftermath even though longer-range guidance beat expectations. The company remains one of the biggest beneficiaries of the AI infrastructure boom, designing custom chips for Google, Meta, and OpenAI, and its AI-related semiconductor revenue jumped 143% over the past year.
Tan doubles down on the Google and Anthropic pipeline
Broadcom chief executive Hock Tan told investors the company expects to accelerate shipments of Google’s Ironwood tensor processing units to Anthropic, along with TPU 8i chips destined for Google’s own data centers, and that Broadcom will deliver tens of billions of dollars worth of these processors to Google every year for the foreseeable future. That commitment underscores how deeply chipmakers have wired themselves into the handful of companies racing to build out AI compute capacity.
It also illustrates the odd position Broadcom occupies in the AI supply chain. Nvidia remains the household name in AI chips, but Broadcom has quietly become the company multiple hyperscalers turn to when they want custom silicon built to their own specifications rather than off-the-shelf GPUs. Google’s TPU line, largely engineered in partnership with Broadcom, is now feeding both Google’s own AI products and, per Tan’s comments, competitors like Anthropic that lease Google’s cloud infrastructure.
The bigger picture for AI spending
A barely-there earnings beat followed by a stock drop on soft guidance is a pattern that has played out across the chip sector this year, as investors grow more skeptical about whether the current pace of AI infrastructure spending is sustainable. Broadcom’s numbers suggest the demand for custom AI silicon is still there. Whether it is enough to justify the valuations chipmakers have been commanding is a separate question that Wednesday’s earnings call did not settle.
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