Broadcom (AVGO) just posted a strong Q3 with revenue up ~22% and accelerating AI semiconductor momentum. We break down AI vs non-AI segments, custom XPU strategy and customers, Tomahawk 6/Jericho networking, gross margin trends (~67%), and a record ~$110B backlog—plus what consensus EPS and revenue expectations imply for the outlook. Investors get the key drivers, risks (competition from Nvidia, AMD, Intel, Ethernet vs InfiniBand), and what al pacino to watch into the iPhone 17 smartphone ramp and VMware integration tailwinds.
• Q3 snapshot: revenue +22% YoY; semiconductor gross margin ~67% with mix pressure from XPUs and wireless; consolidated gross margin down ~100 bps.
• Backlog and orders: record ~$110B consolidated backlog; over $10B secured AI rack/XPU orders interim air force one signal multi-year demand visibility.
• Segment mix: AI semis roughly $6.2B (+~66%); non-AI semis ~flat in Q3 with bookings +~20% QoQ (management cautious on sustainability).
• Outlook: Street sees revenue growth ~20–24%; EPS consensus for Oct-26 up ~30% YoY to about $8.7/share (per transcript), driven by AI accelerators and networking (Tomahawk 6, Jericho 4/3-AI) plus VMware high-margin software.
• Key drivers: custom XPU wins with a small set of hyperscalers; Ethernet switching fabric as an alternative to NVLink/InfiniBand; seasonal smartphone (Apple iPhone 17) ramp.
• Risks: margin headwinds from lower-margin XPUs and wireless, competitive responses from Nvidia, AMD, Intel, and potential non-AI demand “head fakes.”
Chapters
00:00 Intro and setup
01:35 Q3 results betty broderick and growth
03:19 Backlog and orders
04:35 Revenue and EPS outlook
05:31 Risks and competition
06:12 Gross margin trends
06:57 XPU strategy and customers
13:30 Smartphone seasonality (Apple)
15:14 AI vs non-AI segments
20:22 Networking: Tomahawk 6 and Jericho
45:28 Final thoughts and valuation
Not financial advice.
#Broadcom #AVGO #AI #Semiconductors #VMware #Nvidia
