Broadcom on Thursday evening reported a strong quarter and a solid guide. But the stock really got going after CEO Hock Tan talked about $10 billion in custom AI-related orders from a new customer. Revenue in the fiscal 2025 third quarter, which ended Aug. 3, increased 22% year over year to $15.95 billion, ahead of the $15.83 billion consensus forecast, according to estimates compiled by LSEG. Adjusted earnings per share increased 36% from the year-ago period to $1.69, also outpacing expectations of $1.65, LSEG data showed. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 30% year over year to a record $10.7 billion in the quarter, beating the FactSet consensus of $10.46 billion. AVGO YTD mountain Broadcom YTD While the results and the outlook were great, commentary on the post-earnings conference call proved to be the most crucial. At around 5:10 p.m. ET, the Club stock soared after Tan revealed a fourth major customer. He did not name the customer. Shares then caught a second leg higher around 5:30 p.m. ET after Tan said he would remain CEO “at least” through 2026. The stock rose more than 4.5% to just above $320. Bottom line Broadcom’s great quarter, solid guide, and the CEO remarks on the call all pointed to sustained strong demand for artificial intelligence semiconductors and networking solutions, housed in the company’s AI solutions segment. VMWare, the software giant Broadcom bought for $69 billion nearly two years ago, continues to power the company’s infrastructure software segment. Margin performance was also impressive with Broadcom’s fiscal Q3 consolidated gross margin expanding 99 basis points, or nearly a full percentage point, year over year; adjusted EBITDA margin expanded 418 basis points, and operating income profit margin expanding a robust 474 basis points. AI-related revenue in the fiscal third quarter grew 63% year-over-year to $5.2 billion. Better yet, Tan said he expects that acceleration to continue in the company’s current quarter, the company’s fiscal fourth quarter, guiding for $6.22 billion in AI-related revenue. Tan also noted that demand for custom silicon from its three key customers – believed to be Alphabet , Club name Meta Platforms and TikTok parent ByteDance – continued to grow. Broadcom is also in talks with additional prospects – last quarter they quantified it as four prospects – to develop custom silicon. In fact, Tan noted on the call that during the quarter, one of the prospects did indeed release a production order for which Broadcom expects to ship product “pretty strongly” beginning in 2026. Tan noted that the company “secured over $10 billion of orders.” The Financial Times is reporting that Broadcom is working with OpenAI. Perhaps, OpenAI is the fourth customer Tan talked about. As a result, management expects AI revenue for the full year “to improve significantly” versus prior expectations. During the Q & A session, Tan said the addition of a…
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