Hock Tan, CEO of Broadcom.
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Broadcom shares soared 15% on Friday after the chipmaker mentioned on its earnings call that it had secured a brand new $10 billion customer. Analysts rapidly pointed to OpenAI.
Following a better-than-expected earnings report late Thursday, Broadcom CEO Hock Tan advised analysts {that a} fourth giant customer had put in orders for $10 billion in customized artificial intelligence chips, which the corporate calls XPUs.
“One of these prospects released production orders to Broadcom, and we have accordingly characterized them as a qualified customer for XPUs,” Tan mentioned. He added that the order elevated Broadcom’s forecast for AI income subsequent yr, when shipments will start.
Analysts at Mizuho, Cantor Fitzgerald and KeyBanc all mentioned they assume AI startup OpenAI is the customer. The Financial Times reported on Thursday, citing individuals aware of the partnership, that the 2 firms co-designed a chip that can hit the market subsequent yr.
OpenAI declined to remark on the report.
While Broadcom does not identify its giant web-scale prospects, analysts have mentioned relationship again to final yr that its first three purchasers have been Google, Meta and TikTook guardian ByteDance.
“During the call, the company surprised us by noting that it had secured a $10B order from a fourth XPU customer (we believe this is OpenAI), adding significant upside to the company’s three current XPU customers (Google, Meta, and ByteDance),” analysts at Cantor wrote in a observe late Thursday. “Shipments are expected to commence in 2026.”
Broadcom’s stock has been on a tear of late as the corporate has joined Nvidia on the entrance of the race to construct the sorts of processors and infrastructures wanted for large AI workloads. The stock is up about 130% up to now yr, lifting Broadcom’s market cap previous $1.6 trillion.
For the fiscal third quarter, Broadcom reported earnings and income that topped estimates. The firm mentioned it expects $17.4 billion in fourth-quarter income, increased than the $17.02 billion anticipated by Wall Street analysts, with AI income reaching $6.2 billion.
But information of an incoming $10 billion customer is what obtained Wall Street excited.
Tan mentioned on the decision that “immediate and fairly substantial demand” boosts the outlook for subsequent yr, “and really changes our thinking of what 2026 would be starting to look like.”
The firm did not present particular steerage for subsequent yr, however Tan recommended that development in its AI might be above the 50% to 60% vary he’d provided within the prior name.
Analysts at Mizuho raised their AI income development estimate for subsequent yr to 76% up from about 60%, which might carry the full to $35 billion. Total income for the yr ending in October 2026 is anticipated to extend about 30% to $81.8 billion from $63.1 billion this fiscal yr, in accordance with analysts surveyed by LSEG.
In addition to {hardware}, Broadcom has a big software program enterprise, keyed by its $61 billion acquisition of server virtualization software program vendor VMware in 2023. Revenue within the infrastructure software program enterprise, which incorporates VMWare, rose 43% to $6.79 billion.
— CNBC’s Kif Leswing contributed to this report.
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