Custom chip specialist Broadcom is rallying in postmarket trading after delivering a top- and bottom-line beat in Q4 along with a robust outlook for the current quarter.
The results:
Guidance for Q1 2026 was ahead of what Wall Street had penciled in:
“We see the momentum continuing in Q1 and expect AI semiconductor revenue to double year-over-year to $8.2 billion, driven by custom AI accelerators and Ethernet AI switches,” President and CEO Hock Tan said.
That guidance for its AI book of business is a whopping 20% above the consensus estimate for the current quarter.
Management also announced an increase in the quarterly dividend to $0.65 from $0.59.
On the conference call, CEO Hock Tan said the mystery $10 billion new customer announced during the previous quarter’s earnings call was Anthropic, maker of the Claude chatbot. He added that they’ve received an additional $11 billion order from the company.
In total, Broadcom has a $73 billion backlog they expect to realize within the next 18 months.
It’s been a good time to be in the ASICs business. Google’s Gemini 3 model, which received rave reviews, was trained on custom TPUs that it codesigned with Broadcom. In October, the company also booked a deal with OpenAI to deploy 10 gigawatts of AI accelerators starting next year.
Since November 20, when the S&P 500 hit an intermediate bottom, Broadcom’s rally has left its main AI chip competitors, Nvidia and Advanced Micro Devices, in the dust.
In fact, Broadcom’s 12-month forward price-to-earnings ratio stood at a record premium to rival Nvidia’s heading into this report, with Bank of America having argued that this means traders are pricing that the custom chip maker will take some AI market share away from the dominant incumbent.
