Broadcom Inc - 8% PRF CONVERT 30/09/2022 USD 1000 - Ser A

Record quarter + massive AI-led growth - Q3 FY2026 revenue: $29.6B, +86% YoY (consolidated record). - Operating income: $20.1B, +92% YoY; operating margin ~67.9% (non-GAAP EPS $3.32, +96% YoY). - Free cash flow: $13.7B (record), ~46% of revenue. - Key driver: AI semiconductor revenue $16.7B, +221% YoY and +54% sequentially; AI mix continues to expand (lower gross margin due to mix—see negative point below).

AI semiconductor outlook is extremely strong (core investment thesis) - Q4 FY2026 guidance: consolidated revenue $34.8B (+93% YoY). - Q4 AI revenue guidance: $21.7B (+236% YoY) and AI revenue “triples” YoY per management expectation (XPUs + AI networking). - FY2026 AI revenue outlook: $58B (+186% YoY, above prior guide referenced as $56B). - Longer-term visibility: management reiterated a “trajectory” model (not updated quarterly): - FY2027 AI revenue: ~$115B (expects to double again). - FY2028 AI revenue: ~$230B (expects to double again).

Product cycle milestones: XPUs ramping and expanding customer deployments - XPU momentum: “6 XPU customers” accelerating adoption; XPU shipments up >3.5x YoY and ~73% of AI revenue in the quarter. - Technology shipments called out: - Ironwood TPU v7: high-volume shipments to Anthropic and Google. - TPU version 8i: began production shipments to Google; designed for more memory/bandwidth for inference. - Jalapeno (OpenAI): shipped; management claims it outperforms Grace Blackwell GPU for inference and is comparable to Vera Rubin GPUs on OpenAI workloads. - Meta: expected production shipments of MTIA inference/recommendation at scale. - Networking scale-up: AI networking +2.5x YoY; management expects networking to grow “just as fast” as XPUs over coming years.