Broadcom Expects $21.7 Billion in AI Chip Revenue in Fourth Quarter
Key Facts
Broadcom expects AI semiconductor revenue to rise to $21.7 billion in the fourth quarter of its fiscal 2026, up 236% year over year, according to guidance issued by the company on September 2. The estimate puts its AI business at the forefront of its outlook for the period, with growth accelerating from third-quarter results. In the latest available session, Monday, November 9, the stock closed at $319.48, adding $25.79 during trading. Its move came as part of a broader rebound in AI and semiconductor stocks after a sharp sector selloff earlier in the week. Fourth-quarter revenue remains the company's estimate until it reports actual results.
Alongside its AI chip forecast, Broadcom estimated fourth-quarter consolidated revenue at about $34.8 billion, up 93% year over year. This means the company expects total revenue to grow alongside accelerating sales of AI-related semiconductors. It also guided to non-GAAP operating income of about 66% of expected revenue for the period. That estimate puts operating profitability among the indicators to watch as the company seeks to meet its quarterly forecasts. The company said its guidance is based on business trends and conditions at the time it was issued, and actual results may differ materially.
The forecast follows a surge in AI semiconductor revenue in the third quarter, when it reached $16.7 billion, up 221% year over year and 54% from the previous quarter. CEO Hock Tan said, "Demand for custom AI accelerators and networking remains very strong." In the second quarter, the business posted revenue of $10.8 billion and annual growth of 143%. The company had then forecast AI revenue of $16.0 billion in the third quarter, with annual growth above 200%, before the actual result exceeded that level. The sequence of figures reflects a steady rise in the business's quarterly revenue during the fiscal year.
Broadcom's consolidated revenue in the third quarter was $29.591 billion, compared with $15.952 billion in the same period of the prior fiscal year, an annual increase of 86%. Semiconductor solutions accounted for $20.839 billion of revenue, growing 127%, while infrastructure software revenue was $8.752 billion, up 29%. GAAP net income was about $13.088 billion, up 216% year over year, while diluted earnings per share were $2.68. The results show different growth rates across the two businesses, with semiconductor solutions increasing faster during the quarter. They provide financial context for the company's total and segment forecasts for the following period.
Revenue growth was accompanied by free cash flow of $13.7 billion in the third quarter, equal to 46% of revenue, after capital expenditures of $0.5 billion. The company said cash generated from operations was $14.2 billion before those capital expenditures. The cash flow figures sit alongside income and revenue metrics in the quarterly results as the company enters a new quarter in which it expects continued growth in its AI business. These past results do not guarantee that future guidance will be achieved; Broadcom said actual results may differ materially from it. The company is scheduled to report fourth-quarter and fiscal 2026 results after U.S. trading closes on Wednesday, December 9.
Broadcom said management will hold a conference call on December 9 at 2:00 p.m. Pacific time, following the results release. The announcement is expected to include financial results for the fourth quarter and fiscal 2026, along with the business outlook. The date comes a month after the session in which the stock rebounded to close at $319.48. In the same session, the Nasdaq Composite rose 2.7% as part of a broader recovery in the U.S. market. Coverage linked that recovery to earlier market concerns about a slowdown in AI data center construction, while describing Broadcom's move as part of a sector rebound.