(Reuters) -Broadcom expects artificial intelligence revenue growth for fiscal 2026 to "improve significantly", after securing more than $10 billion in AI infrastructure orders from a new customer, CEO Hock Tan said on Thursday.
Tan, who was 73 as of Broadcom's March proxy filing, also said he remains committed to leading the company for at least another five years. Investors welcomed the news, sending shares up 4% in after-hours trading, as Tan is widely credited with transforming Broadcom into one of the world's most valuable chip designers.
Tan had hinted at four new potential customers earlier this year who were "deeply engaged" with the company to create their own custom chips, in addition to its three existing large clients.
Last quarter, a new prospect placed a firm order, turning it into a qualified customer, Tan said on an earnings call without disclosing the buyer's name.
Broadcom has been one of the biggest beneficiaries of the generative AI boom, with hyperscale customers that own data centers looking for alternatives to pricier Nvidia chips. Broadcom helps design custom AI chips.
"Broadcom's custom offerings for cloud giants are well-positioned as Big Tech races to push model training and inference forward, Emarketer analyst Jacob Bourne said.
"While Nvidia's GPUs remain the default choice, custom silicon can deliver niche performance gains that help break through bottlenecks," he said.
Investors have placed high expectations on AI-focused chip firms, betting on their expanding product lineup to fuel rapid growth.
This year Broadcom has launched the Tomahawk Ultra networking chip and a next-generation Jericho networking chip to speed up AI compute, as part of its push to challenge Nvidia's dominance in the AI semiconductor industry.
Broadcom shares have surged nearly 82% since the start of April, building on a more than threefold jump in the past two years, while Nvidia has gained 27% in 2025.
"We expect growth in AI semiconductor revenue to accelerate to $6.2 billion in Q4," Tan said. AI revenue grew 63% to $5.2 billion in the third quarter ended August 3.
While AI demand continues to soar, Tan flagged weakness in the non-AI semiconductor business, with the enterprise networking and service storage units down sequentially.
Broadcom expects fourth-quarter revenue to be around $17.4 billion, compared with analysts' average estimate of $17.01 billion, according to data compiled by LSEG.
Its third-quarter revenue of $15.95 billion beat the estimate of $15.83 billion.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shilpi Majumdar)
