Broadcom (AVGO) reported $16.7 billion in AI semiconductor revenue for the third quarter of fiscal year 2026, a 221 percent increase year over year. CEO Hock Tan stated the company has secured supply to double AI revenue to roughly $115 billion in fiscal 2027 and is targeting $230 billion by fiscal 2028.
The chipmaker generated $13.67 billion in free cash flow during the quarter, representing 46 percent of revenue. Cash on the balance sheet rose to $23.98 billion, up 123.69 percent year over year. Management paid down $5.6 billion of long-term debt in the quarter and an additional $1.5 billion of senior notes after quarter-end, with a weighted-average coupon of 4 percent. A $10 billion share repurchase program was authorized in March 2026, and the company raised its dividend by 10 percent in December 2025 to $0.65 per share quarterly, marking the 15th consecutive annual increase since fiscal 2011.
Broadcom’s custom silicon strategy is gaining traction against general-purpose alternatives. OpenAI’s Jalapeno accelerator outperforms NVIDIA’s (NVDA) Grace Blackwell GPU on inference workloads at half the cost. Tan said Broadcom expects to ship $350 billion of AI semiconductors over a two-year period. Anthropic is positioned to be Broadcom’s top XPU client in 2027 and maintain that status in 2028, with one gigawatt of Ironwood deploying in 2026, five gigawatts of TPU v8i in 2027, and an additional ten incremental gigawatts in 2028.
The company’s infrastructure software segment grew 29 percent year over year, with annual recurring revenue increasing by 15 percent. Management also unveiled VMware Private AI Cloud to extend its enterprise offerings. While customer concentration remains a risk with six primary XPU clients, including Anthropic, OpenAI, Google, and Meta, Broadcom has established an AI XPV financing platform with Apollo and Blackstone. The first $35 billion tranche of this platform closed in June for Anthropic’s one-gigawatt deployment, which is already underway. Tan noted that "Land power and shell... is a big concern" regarding infrastructure constraints.