Broadcom Inc

Q3 FY26 results were record-setting, driven by AI semiconductors - Consolidated revenue $29.6B, +86% YoY (record). - Operating income $20.1B, +92% YoY; operating margin ~68% (record) driven by strong operating leverage. - Free cash flow $13.7B (46% of revenue, record). Capital expenditures $532M. - Mix shift: gross margin ~75% was down ~210 bps sequentially due to higher AI semiconductor proportion (higher memory content).

AI XPU momentum is accelerating sharply; management provided strong Q4 + FY27/FY28 AI growth targets - Q3 AI semiconductor revenue: $16.7B (+221% YoY, +54% sequentially). - “6 XPU customers” accelerating adoption: - 6 XPU custom accelerators revenue grew >3.5x YoY, representing 73% of AI revenue. - AI networking revenue +2.5x YoY. - New products shipped / ramping in Q3: - Ironwood TPU v7 high-volume shipments to Anthropic and Google. - Began production shipments of TPU v8i (Google) and it’s designed for more memory/bandwidth; designed for inference and said to be comparable to or surpassing Vera Rubin GPU. - Shipped Jalapeno (OpenAI) first-gen custom accelerator; stated to outperform Grace Blackwell GPU for inference workloads. - Continued Meta MTIA production shipment ramp for inference/recommendation. - Q4 guidance (FY26): - Consolidated revenue $34.8B (+93% YoY). - Q4 AI revenue $21.7B (+236% YoY); operating margin ~66%. - FY27 AI outlook: ~$115B AI semiconductor revenue (+~100% YoY / “double”). - FY28 AI outlook: ~$230B AI semiconductor revenue (another double). - Surprise/optimism: management indicated demand could be higher than these supply-backed numbers, and hinted they believe they can work to improve supply.

Customer “deployments” vs “chips shipped”: guidance is supply-constrained by real-world data center readiness - CEO emphasized outlook conservatism: even if supply is increased, the key question is whether capacity is deployed on time (customer data center readiness). - Explicit constraints discussed: land, power, and “shell” (construction / sites) are major gating factors due to long lead times. - Also multi-dimensional supply constraints include: - Leading-edge substrates (Broadcom is planning Singapore substrate fab start FY27). - HBM / advanced memory availability (customers must secure system memory too; Broadcom does not necessarily supply all memory). - General leading-edge wafer + packaging + interconnect capacity. - Management stated these constraints were already reflected in the $115B (FY27) and $230B (FY28) AI revenue targets.