Broadcom’s AI Revenue Is Growing at 221%. Here’s Why Custom Chips Could Be a Bigger Business Than GPUs. – AOL

vm_admin
Broadcom’s AI Revenue Is Growing at 221%. Here’s Why Custom Chips Could Be a Bigger Business Than GPUs. – AOL

By Adam Levy, The Motley Fool
Publication Date: 2026-10-07 11:53:00

Key Points

  • Broadcom is the leading custom AI accelerator partner, and it’s growing extremely quickly.

  • There are multiple reasons why custom chips are an important factor in the future of AI.

  • Broadcom trades at a premium to Nvidia, but the strength of its AI chips may justify the premium.

Broadcom(NASDAQ: AVGO) grew its artificial intelligence semiconductor revenue by 221% year over year in the third quarter, and that growth could accelerate in the fourth quarter. Management’s outlook calls for $21.7 billion worth of AI-related revenue, up 236% from a year ago.

There’s a clear driver behind that revenue — custom AI accelerators, or what management calls XPUs. These chips are designed in partnership with hyperscalers, including Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms(NASDAQ: META), Anthropic, and OpenAI. And while Nvidia(NASDAQ: NVDA) and its GPUs have been the workhorse of AI training and inference, custom semiconductor chips could end up being a much bigger…

Related Posts