AI chips made up 56% of Broadcom's revenue in fiscal Q3 2026, up from 49% in fiscal Q2, mostly from custom chips for customers such as Google, Meta and OpenAI. AI chip revenue reached $16.7 billion, up 221% year over year, while infrastructure software and other chips grew much more slowly. Management guided fiscal Q4 2026 revenue to $34.8 billion, including $21.7 billion from AI chips, which would be about 62% of sales, though this is a forecast. Adjusted gross margin fell 210 basis points to 75% as AI chips grew in the mix, and management expects about 73% in fiscal Q4 due to more memory in custom chips, while operating income rose 92%. Anthropic is expected to become the largest custom chip customer in 2027 and OpenAI the second largest in 2028, and the stock fell 21.0% from April 27 to October 26, 2026 including dividends, versus a 7.6% gain for the S&P 500.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
Broadcomsemiconductorsartificial intelligenceAnthropic
Open a keyword to see other news on the same topic.
Related news
- Broadcom Is Backing Anthropic and OpenAI With $92 Billion. Here's What It Means for Investors.
Broadcom could finance up to $92 billion in chip purchases for Anthropic and OpenAI, including $42 billion of senior debt for Anthropic backed by Broadcom guarantees and the residual value of its chips. An $18 billion junior debt tranche for Anthropic would have no Broadcom guarantee and must wait until Anthropic's financials are public, while Broadcom is also in talks to secure up to $50 billion for OpenAI to buy its custom XPUs. The article argues this strengthens Broadcom's competitive position in custom AI chips but adds risk, since XPUs are less versatile than GPUs and their resale value could be lower. OpenAI plans to deploy 1.3 gigawatts of XPUs next year and up to 5 gigawatts in 2028, while Anthropic is on track to become Broadcom's largest XPU customer next year.
- Prediction: Broadcom Stock Could Be Worth Twice as Much by 2030
Broadcom's AI semiconductor revenue reached $16.70B, up 221% year over year, and total revenue rose 85.5% to $29.59B, yet the stock is down 6.45% this year at $323.24. The article says shares sit near the 52-week low of $288.95 rather than the high of $493.28, and points to competition from Google's cheaper second sources and a 210 basis point sequential drop in gross margin. The article's model sets a one-year target of $402.33, while the consensus target is $527.59. Reaching $650 by 2030 would require a 101.1% gain, or about 35x the forward EPS of $18.376. The article ties this to AI revenue of roughly $115 billion in fiscal 2027 and $230 billion in fiscal 2028, with management saying fiscal 2028 EPS should exceed $30. The main risk noted is that a few AI labs drive most of the demand.
- Not AMD. Not Marvell. Here's Which Company Nvidia Needs to Be Worried About.
Nvidia leads the AI computing chip market, but the author argues Broadcom, with its custom AI chips, poses a bigger threat than AMD or Marvell. Broadcom's AI semiconductor revenue reached $16.7 billion, while Marvell's AI data center revenue totaled $2.1 billion in Q2. Broadcom has worked with Alphabet for a long time on Google's TPU and also has partnerships with Meta, Anthropic, and OpenAI. Broadcom estimates its AI segment revenue at about $58 billion this year, rising to $115 billion in 2027 and $230 billion in 2028, while Nvidia expects about 70% revenue growth in 2027. At 43 times trailing earnings and 17 times next year's estimates, the author argues the stock does not reflect that growth and considers it attractive.
- Why Is Broadcom (AVGO) Deepening Its Role In AI Storage Infrastructure?
Broadcom (NasdaqGS: AVGO) has qualified Seagate Technology's Mozaic hard drives for use with its host bus adapters in enterprise storage systems. The Mozaic lineup combines HAMR and SMR recording technologies and targets very high-capacity workloads in data centers. Microsoft Azure Storage has validated the combined Broadcom, Seagate and Mozaic stack in a hyperscale cloud deployment. The article notes that lower-margin, memory-heavy AI hardware is weighing on Broadcom's consolidated gross margin, and that AI infrastructure financing structures carry off-balance-sheet risk.
- Prediction: Broadcom Will Be a $4.5 Trillion Company by 2030
The author argues Broadcom could reach a $4.5 trillion market cap by 2030, from just over $1.5 trillion today. The thesis rests on rising demand for Broadcom's custom AI processors (XPUs) from customers such as Alphabet's Google, Meta Platforms, Anthropic and OpenAI, with XPU shipments up 3.5x and AI networking revenue up 2.5x year over year in fiscal Q3 2026. Broadcom expects AI revenue of $58 billion in fiscal 2026 and $230 billion in fiscal 2028, with EPS that could exceed $30.00 in fiscal 2028. Assuming 30% annual EPS growth in fiscal 2029 and 2030 to reach $51.36, and a 20x multiple, the article estimates a share price of $1,027, just over 3x current levels. The stock trades at 17 times forward earnings, a slight discount to the Nasdaq-100's 21.5.
- Here's What $10,000 Invested Equally in Nvidia, AMD, and Broadcom Could Be Worth by 2030
A $10,000 investment split equally among Nvidia, AMD and Broadcom could be worth about $29,000 by end-2030, provided AI infrastructure spending keeps growing. The author's projections value the 15.7 Nvidia shares at $14,475, based on a share price of about $922, a 19x forward P/E multiple, and EPS above the $28.79 consensus for fiscal 2031, which the author considers low. AMD, with 6.5 shares, is expected to benefit from AI inference demand and target a 50% share of a $220 billion server CPU market by 2030, which could take the position to $6,565. Broadcom, a leader in custom AI chips, could take its 10.3 shares to about $10,197 by late 2030.
Related markets
Latest news
- EU Gas Prices Hit 4-Year High
European wholesale gas prices topped 97 euros per megawatt-hour on October 26, the highest since December 2022, as EU gas storage was only 74.62% full on October 25. LNG flows through the Strait of Hormuz remain about 80% below pre-conflict levels following the US-Israeli war on Iran. Trading Economics forecasts 98.20 euros/MWh by the end of Q4 2026, while in the UK one-month gas futures rose 4%, and Brent is around 115 USD a barrel. EDF expects UK household energy bills to rise 27% in January 2027, lifting the average annual bill to nearly 2,200 pounds (2,940 USD). Berlin plans to ask households and businesses to contribute over 3 billion euros across 10 years to an emergency gas reserve, while the EU's Russian gas share fell from about 45% in 2021 to about 12% in 2025.
- Can Anthropic prove it can rival Big Tech? Its balance sheet says yes.
Host Ejaaz Ahamadeen of In the Loop says Anthropic's (ANTH.PVT) S-1 filing shows about $132 billion in cash, far from the near-zero balance rumored in recent months despite heavy compute spending. Around $19 billion of that is reportedly in investment-grade contracts, giving the company funds for large capital expenditure commitments. He compares that cash pile with those of Apple and of Google and Meta before they spent heavily on GPUs, saying Anthropic now plays in the same league. He notes that Anthropic lacks the revenue diversification of Google or Meta, making it a more precarious bet as an IPO candidate because it relies solely on AI.
- Anthropic's 'tension' between profitability & 'public good': IPO expert
Jim Neesen, managing partner of The Connor Group, tells Yahoo Finance's Brian Sozzi that Anthropic's (ANTH.PVT) IPO filing is unusual because it is a public benefit company. Seven founders hold 50.1% of the company, and a board approved by a trust fund will oversee it, with social benefit built into its mission alongside profit. He sees a group of founders making joint decisions as potentially positive, but says the structure will be tested at this scale and growth rate. He describes a tension between profitability, public good and the quarterly pressure from investors, and notes Anthropic has not yet published its total addressable market (TAM), though he expects it to be north of 10 trillion or 20 trillion, citing SpaceX's claim that AI is over 29 trillion.
- Our Model and Wall Street Agree on Amazon's Target. Now the Quarter Has to Deliver.
The 24/7 Wall St. model sets a $329.70 price target for Amazon, 31.68% above the $250.38 close, with a buy rating at 70% confidence, within 0.61% of the Wall Street consensus target of $331.72. Q3 results are due October 29 after the close, with guidance for $197–202 billion in sales and $22.5–26.5 billion in operating income, versus $17.4 billion a year earlier. Q2 revenue rose 19.6% to $200.61 billion and AWS grew 37% to $42.23 billion, yet shares sit about 12.8% below their 52-week high of $287.20. The bear case of $283.71 points to about $220 billion of 2026 capex, trailing free cash flow of -$7.6 billion and long-term debt of $119.1 billion, while the $378.96 bull case rests on an AWS backlog of $496 billion. The article says the thesis depends on Q3 operating income and AWS growth staying near the Q2 pace.
- BC-Most Active Stocks
The article lists the most active stocks on the Nasdaq Composite, NYSE and NYSE American, published by AP on October 27, 2026 (GMT+7). On Nasdaq, Solowin Holdings led with 270,698,916 shares traded, followed by 22nd Century Group (195,124,628) and Nexera Technologies (135,322,623). Large technology names also appeared, including NVIDIA (19,429,424 shares) and Tesla (13,463,944 shares).
- The real source of tech market volatility is cash flow, not credit default swaps
Yahoo Finance Executive Editor Brian Sozzi argues that the main driver of volatility in tech stocks is collapsing free cash flow at hyperscalers, not credit default swaps, since that cash will be used to repay the debt they take on to fund AI infrastructure. Citing Evercore ISI's Julian Emanuel, he notes the hyperscaler group of Meta, Amazon, Google, Microsoft, Oracle and SpaceX is expected to have free cash flow near negative $200 billion over the next year. Meta posted negative free cash flow in its third quarter for the first time since 2012, while SpaceX burned about $9.9 billion, and neither company signaled a slowdown in spending. Similar commentary is expected from Google, Amazon and Microsoft when they report this week, which supports Emanuel's view of more quarters of negative free cash flow.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.