Broadcom posted $16.7 billion in AI semiconductor revenue for its fiscal third quarter of 2026, up 221% year-over-year and 54% sequentially, the company reported on September 2, 2026. Total revenue reached $29.59 billion against a $29.36 billion Wall Street consensus, while adjusted earnings of $3.32 per share topped the roughly $3.24 estimate.

The AI segment alone now accounts for approximately 56% of total company revenue. CEO Hock Tan framed the surge around customer breadth rather than any single product line. "Our six XPU customers are accelerating the adoption of custom accelerators and AI semiconductor revenue more than tripled year-over-year to $16.7 billion," Tan said on the earnings call.

What drove the 221% jump?

Working backward from the 54% sequential figure implies Q2 fiscal 2026 AI semiconductor revenue of roughly $10.8 billion. Volume, not pricing, explains the bulk of the increase. Custom AI processor shipments rose approximately 3.5x year-over-year in the quarter, per Yahoo Finance's analysis of the earnings release.

Custom silicon now accounts for nearly three-quarters of segment revenue, or roughly $12.5 billion of the $16.7 billion figure. The remainder came from AI networking silicon, an area where Broadcom has long held a strong franchise.

Which customers does Broadcom serve?

Broadcom confirmed four named partners on the call and in surrounding coverage:

• OpenAI: receives the new "Jalapeño" accelerator
• Meta: production shipments of its custom MTIA chip
• Google: continued TPU partnership
• Anthropic: receives Ironwood TPU v7 alongside Google

Tan said Broadcom shipped Jalapeño in Q3 and made a direct performance claim against Nvidia's flagship. "In Q3, we also shipped Jalapeño, OpenAI's first generation custom accelerator, which outperforms Grace Blackwell GPU for inference workloads," Tan said. The Grace Blackwell comparison has not been independently verified in public benchmarks.

On the TPU side, Tan added: "During the quarter, we delivered Ironwood TPU v7, version 7 in high volume to both Anthropic and Google." Morningstar's coverage noted management expects OpenAI and Anthropic to become Broadcom's two largest customers starting in 2027, shifting the customer mix away from Google.

What does the Q4 outlook imply?

Management guided fiscal Q4 2026 AI semiconductor revenue to approximately $21.7 billion, which Yahoo Finance calculates at roughly 236% year-over-year growth. Full-year fiscal 2026 AI revenue now targets approximately $58 billion, up from an earlier $56 billion estimate, per Investing.com.

Looking past 2026, management pointed to AI revenue quadrupling from 2026 levels and non-GAAP EPS nearly tripling to $30 by 2028, according to Morningstar's reporting on the call.

Why did the stock drop on a record beat?

Shares closed September 2 at $367.47, down 0.6% from $369.68, then fell 3.1% to $355.89 in premarket trading September 3, per Investing.com and Benzinga. The market had already priced in steeper near-term guidance, leaving the Q4 outlook short of where investors expected even higher numbers.

How did analysts respond?

Most firms raised price targets; Bank of America went the other way.

• Cantor Fitzgerald (C.J. Muse): Overweight, raised to $600 from $525
• BMO Capital (Harsh Kumar): Outperform, raised to $575 from $455
• Rosenblatt (Sajal Dogra): Buy, raised to $600 from $500
• Bank of America (Vivek Arya): Buy, cut to $460 from $530
• Goldman Sachs: raised to $540 from $525
• Bernstein: Buy reiterated at $575

By late September, MarketBeat put consensus at "Moderate Buy" with an average target of $527.20.