Broadcom Stock Skyrockets 4% on Stunning Earnings Beat and Massive $10 Billion Custom Chip Deal

Semiconductor giant Broadcom just delivered a knockout quarter—shattering expectations and landing a monster contract that sent shares soaring.

The $10 Billion Power Play

That custom chip order isn't just big—it's industry-shifting territory. We're talking next-gen AI infrastructure, hyperscale data centers, and the kind of deal that makes competitors sweat. Wall Street's betting this cements Broadcom's dominance in the high-margin custom silicon space.

Earnings Crush Forecasts

Numbers don't lie—Broadcom blew past estimates with margins that'd make any CFO grin. Revenue surged, profitability expanded, and guidance suggests this isn't a one-hit wonder. The street's recalculating price targets as we speak.

Why This Matters Beyond Semiconductors

This isn't just about chips—it's about the entire tech ecosystem. From cloud providers to AI startups, everyone's scrambling for custom silicon that delivers performance without burning power plants. Broadcom's positioned to cash in on that arms race.

Let's be real—when traditional finance finally wakes up to tech trends, they overpay for yesterday's news. Meanwhile, Broadcom's executing on tomorrow's infrastructure today.

Broadcom lands new client for XPU AI chips

CEO Hock Tan said the company has secured $10 billion worth of orders for its XPU custom AI chips from a fourth cloud customer—someone new, not among the three major clients Broadcom was already working with.

“One of these prospects released production orders to Broadcom, and we have accordingly characterized them as a qualified customer for XPUs,” Tan said. He added that shipping will begin in 2026, and the deal has already bumped up Broadcom’s expected AI chip revenue for next year.

Broadcom is already known for building chips for Google and other large cloud firms. It also designs the networking and support software needed to connect AI systems. Tan said the company’s AI-related revenue reached $5.2 billion this quarter, up 63% from last year and ahead of Broadcom’s earlier forecast of $5.1 billion. He expects $6.2 billion in AI revenue in Q4.

AI is just one part of the growth. Broadcom’s semiconductor business, which includes all chip sales, reported $9.17 billion in revenue, up 57% from last year. Its infrastructure software division, which now includes VMware, brought in $6.79 billion, a 43% jump. Tan credited all three—custom AI chips, networking parts, and VMware software—for the company’s Q3 growth.

Broadcom posted net income of $4.14 billion, or 85 cents per share, compared to a $1.88 billion loss (40 cents per share) a year ago. That earlier loss was due to a $4.5 billion one-time tax expense from moving intellectual property into the U.S.

Market watches Broadcom rise as Nvidia stalls

Broadcom’s market cap now sits at over $1.4 trillion, after nearly doubling over the last year. The stock is already up 32% year-to-date as of Thursday’s close. Investors are watching closely because these developments could challenge Nvidia’s grip on the AI chip market.

Back in March, Tan had revealed Broadcom was working with three cloud clients to build custom chips. With this fourth client onboard and real orders on the table, it signals real competition. Nvidia might be in trouble down the line.

But Nvidia still holds weight. It became the first company to hit a $4 trillion market cap, and $1 trillion of that came this year alone. It currently makes up 8% of the S&P 500. That’s why investors are nervous: if Nvidia slows, what happens to the broader market?

Jay Woods, chief global strategist at Freedom Capital Markets, said Nvidia’s stock performance affects the entire index. “I think this turns away the focus on the chip story and returns the focus back to the Fed,” Woods said. He believes the next wave in the market won’t come from AI names like Nvidia or Broadcom but from what the Federal Reserve decides on interest rates.

Woods noted that Nvidia could pause or pull back a bit after its big run since April lows. “Nvidia is still trading NEAR all time highs. … This isn’t going to be the catalyst to get us to that next level,” he said.

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