Broadcom's AI Demand Skyrockets

Broadcom anticipates a substantial upswing in its artificial intelligence revenue for fiscal year 2026, driven by increasing demand for custom AI accelerators and networking solutions. CEO Hock Tan highlighted a major order exceeding $10 billion for AI chips based on Broadcom's XPUs from a new customer, further bolstering the company's outlook. This positive forecast follows a strong third quarter, where AI revenue grew by 63% year-over-year, reaching $5.2 billion.

The company's strategic focus on custom AI chips, particularly ASICs (Application-Specific Integrated Circuits), caters to the specific needs of cloud providers like Google and Meta, offering enhanced efficiency and lower total cost of ownership compared to general-purpose GPUs. Broadcom is increasing its CoWoS packaging orders for 2026 to meet the surging ASIC demand. The demand for AI networking is also strong, as it becomes critical for evolving large language models and larger compute clusters.

Broadcom's success is underpinned by its ability to secure orders and maintain its position in the AI chip market through strategic partnerships and advanced packaging technologies. With mass production beginning in Q4 2025, Broadcom is set to capitalise on the growing AI infrastructure market, with analysts predicting AI revenue to surpass $30 billion next year.