Broadcom 3Q Profit Soars on Growing Custom Chip Demand — Update

By Elias Schisgall

Broadcom more than tripled its profit and nearly doubled its revenue in the third quarter, as the company said demand for its custom semiconductors should continue growing for the next two years.

The company has in recent years found a lucrative business designing purpose-built computer chips for artificial-intelligence labs such as OpenAI, Anthropic, and Google. Their computing needs are only increasing, Chief Executive Hock Tan told analysts on a Wednesday call.

"We believe the vast majority of compute demand for AI workloads today originates from this concentrated group who develops state of the art frontier models, and we expect their need for compute infrastructure to inflect even more in 2027 and 2028," Tan said, adding that the demand continues to grow exponentially.

He added that Broadcom has begun shipping the latest generation of Google TPUs and OpenAI Jalapeño chips, and is already developing OpenAI's second- and third-generation chips. Custom chips for Meta Platforms will begin shipping in the current quarter.

The custom chip business represented 73% of the company's $16.7 billion in AI semiconductor revenue during the third quarter, Tan said. That figure is expected to grow to $21.7 billion in the current fourth quarter.

Broadcom has secured the supply to support AI semiconductor revenue doubling to $115 billion in fiscal 2027, and that the company has line of sight toward a further doubling in 2028 to $230 billion, Tan said.

"Our demand actually exceeds this outlook and we will work to improve supply," he said. Chip makers, like technology companies across the economy, are struggling with a costly bottleneck in memory chips.

Shares of Broadcom were roughly flat after-hours on Wednesday, after falling initially on the company's earnings report.

That report showed a profit of $13.09 billion, or $2.68 a share, in the quarter ended Aug. 2, compared with a profit of $4.14 billion, or 85 cents a share, a year earlier.

Stripping out certain one-time items, adjusted earnings were $3.32 a share. Analysts polled by FactSet were expecting $3.22.

Revenue grew to $29.59 billion from $15.95 billion, beating analyst expectations for $29.24 billion.

The company projected total revenue in the fourth quarter to grow to $34.8 billion. Analysts had been expecting $34.68 billion.

Write to Elias Schisgall at elias.schisgall@wsj.com

(END) Dow Jones Newswires

September 02, 2026 18:50 ET (22:50 GMT)