(Bloomberg) – Hock Tan, CEO of Broadcom Inc., told investors that Chipmaker's artificial intelligence outlook would “significantly” improve in 2026, helping to ease concerns about slowing growth.
In a conference call following the quarterly results, Tan said the company is working with prospects to develop AI Accelerators, a market currently dominated by Nvidia Corp.
“Last quarter, one of these prospects released a production order to Broadcom without naming their customers,” he said. “We now hope that our 2026 AI revenue outlook will improve significantly from what we showed in the last quarter.”
Tan previously said that AI revenues in 2026 would show similar growth this year. This is a 50% to 60% rate. Now, the new customers he said is “instant and fairly substantial,” Tan said, which he said will accelerate in a way that makes the rate “pretty material.”
Broadcom's quarterly results initially elicit lukewarm responses from investors. This is a sign that they were expecting a bigger return from the AI boom. After the reporting prompted a change, stocks rose more than 3% during conference calls.
The company said in a previous statement that its fourth quarter sales will be around $17.4 billion, which will be held through October. Analysts had averaged $17.05 billion, while some estimates exceeded $18 billion, according to data compiled by Bloomberg.
Expectations were on a strong footing towards the revenue report. Broadcom has more than doubled since it hit its low in April, adding about $700 billion to the company's market value, making it the third best performer on the Nasdaq 100 index.
Investors are looking for signs that technology spending remains strong. Last week, Nvidia made an overwhelming revenue forecast, sparking fear of the artificial intelligence industry's bubble.
Broadcom has not experienced Nvidia's runaway sales growth, but is considered a key AI beneficiary. Customers develop and run artificial intelligence models and rely on custom designed chips and networking equipment to handle the load. Stocks were up 32% per year.
During the call, Tan said he and the board agreed to remain Broadcom CEO until 2030 “at least.”
In the third quarter, which ended August 3rd, sales rose 22% to nearly $16 billion. The profit except for some items was $1.69 per share. Analysts estimated revenues of around $15.8 billion and earnings of $1.67 per share.
AI semiconductor sales were $5.2 billion, but an estimated $5.1 billion. The company expects revenue from that category to reach $6.2 billion in the fourth quarter. Analysts projected $5.82 billion.
Other AI-focused shipmakers have recently come across. Shares of Marvell Technology Inc., a close competitor of Broadcom in the custom semiconductor market, plummeted 19% on Friday after revenues from the company's data centers missed estimates.
Broadcom's Tan is upgrading its networking equipment to better transfer information between expensive graphics chips at the heart of AI data centers. As his latest comments suggest, Broadcom is also making progress in finding customers who want custom-designed tips for AI tasks.
Tan has used years of acquisitions to turn Broadcom into a vast software and hardware giant. In addition to AI work, the Palo Alto, California-based company manufactures connected components for Apple Inc.'s iPhones and sells virtualization software to run networks.
(The details of conference calls starting with the fourth paragraph will be updated.)
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