Broadcom on Wednesday evening beat quarterly earnings expectations and provided a strong multiyear revenue forecast for its artificial intelligence custom chip business. Revenue in the fiscal third quarter of 2026, which ended Aug. 2, rose 85% year-over-year to $29.59 billion, a slight beat versus the $29.36 billion consensus forecast. Adjusted earnings per share (EPS) increased 96% to $3.32, beating expectations of $3.24.
However, Broadcom shares were down modestly in after-hours trading. A silver lining is that the stock was down 7% at one point. Broadcom has become a big disappointment of late, with shares only up about 6% for the year.
CEO Hock Tan needed to come out swinging on the conference call, and he did just that when he went over what he expected Broadcom's AI revenues will be over the next few years. Based on current fiscal fourth-quarter AI revenue guidance of $21.7 billion, Broadcom expects to do $58 billion of AI revenue in fiscal year 2026.
Tan also updated that guide to $115 billion for fiscal year 2027, which was initially a bit disappointing as many expected Broadcom to raise its outlook somewhere in the $20 billion to $25 billion range.
Tan mentioned that he expects AI revenue to double again in fiscal year 2028 to $230 billion, which is above the FactSet consensus estimate of $177 billion.
Broadcom's AI business includes both custom chip revenue and networking products such as Ethernet switches.
