5 min read
Broadcom just reported third-quarter results that easily outpaced Wall Street’s expectations and raised its guidance.
The robust results confirm that the implementation of AI continues.
As the leading provider of processors used to power AI, Nvidia is well positioned to profit from these secular tailwinds.
The past few years have been fast and furious for Nvidia (NASDAQ: NVDA) investors. The company’s graphics processing units (GPUs) helped lay the foundation for the artificial intelligence (AI) revolution. The demand for these processors has been off the charts, driving an unprecedented surge in revenue and profits. This fueled blistering gains in the stock price, which vaulted Nvidia’s market cap to $4 trillion, the first company to ever surpass that lofty benchmark.
However, after several years of stellar gains, Nvidia investors are looking beyond the buzz and wondering if the stock has simply come too far, too fast. Many are looking for evidence that AI will live up to the hype, fueling greater adoption in the months and years to come.
Broadcom (NASDAQ: AVGO) just provided proof positive that the adoption of AI continues unfettered.
Broadcom announced the results of its fiscal 2025 third quarter (ended Aug. 3), and the results were robust by every important measure. Record revenue of $15.95 billion climbed 22% year over year, fueling adjusted earnings per share (EPS) of $1.69, which jumped 36%.
For context, analysts’ consensus estimates called for revenue of $15.82 billion and adjusted EPS of $1.66, so Broadcom cleared expectations with room to spare.
Demand for AI was the driving force behind the stellar results, as AI-centric revenue accelerated 63% year over year to $5.2 billion. This also marked the company’s 10th consecutive quarter of AI-fueled growth. Free cash flow clocked in at $7 billion, up 47% year over year.
Broadcom gave investors other reasons to celebrate. CEO Hock Tan revealed that beyond its three existing hyperscale customers, one prospective customer had ordered production of its custom AI accelerators, becoming a “qualified customer,” something Broadcom has been signaling for months. The combination of higher demand and the new customer increased the company’s backlog to $110 billion.
The chief executive also boosted Broadcom’s fourth-quarter outlook and is now guiding for revenue of $17.4 billion, an increase of 24% compared to the prior-year quarter. For context, analysts’ consensus estimates were calling for Q4 revenue of $17.01 billion. This illustrates that despite an already robust outlook, demand for AI continues to outpace expectations. Tan went on to say that while Broadcom originally expected its 2026 growth to mirror 2025, he now sees growth accelerating.