Broadcom Secures $10 Billion AI Chip Order, Sparking Stock Rally
Broadcom’s shares surged 9.4% following an announcement on its earnings call that it has secured a $10 billion order from a new customer for its custom artificial intelligence chips, known as XPUs. CEO Hock Tan confirmed that this fourth large client had released production orders, significantly boosting Broadcom’s AI revenue outlook.
OpenAI Identified as Likely Customer
While Broadcom did not publicly disclose the customer’s identity, several analysts from Mizuho, Cantor Fitzgerald, and KeyBanc have pointed to AI startup OpenAI as the buyer. This aligns with a Financial Times report indicating a co-designed chip by Broadcom and OpenAI set to launch next year. OpenAI has declined to comment on these reports.
Strong Financial Performance and Growth Projections
Broadcom reported better-than-expected earnings and revenue for its fiscal third quarter, with revenue guidance for the fourth quarter at $17.4 billion, surpassing analyst estimates. The company anticipates AI-related revenue to reach $6.2 billion this quarter, with expectations for substantial growth in 2026 driven by the new $10 billion order.
CEO Tan indicated that demand for XPUs is “immediate and fairly substantial,” suggesting AI revenue growth could exceed previous projections of 50% to 60%. Mizuho analysts raised their forecast to a 76% increase next year, potentially bringing AI revenue to $35 billion and total revenue to $81.8 billion by fiscal 2026.
Broadcom’s Expanding AI and Software Footprint
Broadcom has solidified its position in AI infrastructure alongside competitors like Nvidia. Its recent $61 billion acquisition of VMware has also bolstered its infrastructure software business, which saw a 43% revenue increase to $6.79 billion in the latest quarter.
With XPUs gaining traction among major technology players—previously including Google, Meta, and ByteDance—Broadcom’s entry into the AI chip market is accelerating its growth trajectory and market capitalization, which now stands near $1.6 trillion.
FinOracleAI — Market View
Broadcom’s announcement of a $10 billion AI chip order, widely attributed to OpenAI, significantly strengthens its growth outlook in the rapidly expanding AI hardware market. The confirmation of a large customer and higher-than-expected revenue guidance has triggered a strong positive market reaction. Key risks include execution challenges on large-scale chip production and competitive pressures from other semiconductor firms like Nvidia. Investors should monitor Broadcom’s delivery timelines and further AI revenue disclosures in upcoming quarters.
Impact: positive
