Hock Tan, CEO of Broadcom.
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Broadcom shares soared 11% on Friday after the chipmaker said on its earnings call that it had secured a new $10 billion customer. Analysts quickly pointed to OpenAI.
Following a better-than-expected earnings report late Thursday, Broadcom CEO Hock Tan told analysts that a fourth large customer had put in orders for $10 billion in custom artificial intelligence chips, which the company calls XPUs.
“One of these prospects released production orders to Broadcom, and we have accordingly characterized them as a qualified customer for XPUs,” Tan said. He added that the order increased Broadcom’s forecast for AI revenue next year, when shipments will begin.
Analysts at Mizuho, Cantor Fitzgerald and KeyBanc all said they think AI startup OpenAI is the customer. The Financial Times reported on Thursday, citing people familiar with the partnership, that the two companies co-designed a chip that will hit the market next year.
OpenAI declined to comment on the report.
While Broadcom doesn’t name its large web-scale customers, analysts have said dating back to last year that its first three clients were Google, Meta and TikTok parent 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 note late Thursday. “Shipments are expected to commence in 2026.”
Broadcom’s stock has been on a tear of late as the company has joined Nvidia at the front of the race to build the kinds of processors and infrastructures needed for massive AI workloads. The stock is up about 130% in the past year, lifting Broadcom’s market cap past $1.6 trillion.
For the fiscal third quarter, Broadcom reported earnings and revenue that topped estimates. The company said it expects $17.4 billion in fourth-quarter revenue, higher than the $17.02 billion projected by Wall Street analysts, with AI revenue reaching $6.2 billion.
But news of an incoming $10 billion customer is what got Wall Street excited.
Tan said on the call that “immediate and fairly substantial demand” boosts the outlook for next year, “and really changes our thinking of what 2026 would be starting to look like.”
The company didn’t provide specific guidance for next year, but Tan suggested that growth in its AI could be above the 50% to 60% range he’d offered on the prior call.
Analysts at Mizuho raised their AI revenue growth estimate for next year to 76% up from about 60%, which would bring the total to $35 billion. Total revenue for the year ending in October 2026 is expected to increase about 30% to $81.8 billion from $63.1 billion this fiscal year, according to analysts surveyed by LSEG.
In addition to hardware, Broadcom has a large software business, keyed by its $61 billion acquisition of server virtualization software vendor VMware in 2023. Revenue in the infrastructure software business, which includes VMWare, rose 43% to $6.79 billion.
— CNBC’s Kif Leswing contributed to this report.
