Despite weak fourth-quarter guidance, Broadcom Inc.’s (NASDAQ:AVGO) management revealed a multi-year AI revenue outlook and touted its custom silicon, which “Mad Money” host Jim Cramer dubbed as an upcoming “explosion of business.”
Meanwhile, CEO Hock Tan claimed in the earnings call that Broadcom’s custom chip for OpenAI outperforms Nvidia Corp.’s (NASDAQ:NVDA) flagship Grace Blackwell for significantly less money.
Doubling Down on the Future
Despite a double beat in the third quarter, Broadcom issued soft guidance, expecting fourth-quarter revenue of approximately $34.8 billion versus estimates of $35.03 billion.
Looking ahead, Tan mapped out an aggressive growth trajectory, projecting AI semiconductor revenue to double to approximately $115 billion in fiscal 2027 and double again to $230 billion in 2028.
Anthropic is slated to deploy 5 gigawatts of compute in 2027 and another 10 gigawatts in 2028, cementing its status as Broadcom’s largest custom chip customer, while OpenAI plans to deploy 1.3 gigawatts of AVGO’s custom Jalapeno chip next year.
Following the management comments on AVGO’s trajectory, Cramer added in an X post that “Broadcom tells a story of an explosion of business coming.”
Taking Aim at Nvidia With ‘Jalapeno’
On the earnings call, Tan took direct aim at the current GPU market leader. He highlighted “Jalapeno,” OpenAI’s first-generation custom accelerator built by Broadcom.
Tan stated that Jalapeno “outperforms the Grace Blackwell Ultra in performance per watt, latency, throughput, and power” for inference workloads.
Pointing to the economic advantage of specialized hardware, Tan noted that a chip optimized for specific large language models will “outperform any GPU” and can do so “at half the cost of a GPU.”
The ‘Overtime Save’ and AI Surge
Broadcom shares initially slumped over 5% after hours after the weak fourth-quarter revenue guidance; however, the stock recovered as the market digested a historic surge in custom AI chip demand. Third-quarter AI semiconductor revenue hit $16.7 billion, up 221% year-over-year.
Total third-quarter revenue reached a record $29.6 billion, with non-GAAP earnings of $3.32 per share beating expectations. The dramatic turnaround in sentiment prompted Cramer to call the print an “overtime save.”
How Has Broadcom Performed in 2026?
Price Action: At the last check, the AVGO stock was trading 3.11% lower in premarket trading on Thursday. It was up 6.11% year-to-date, advancing by 23.14% over the last year, and rose 15.19% over the last six months. It closed 0.66% lower at $367.24 per share on Wednesday.
Benzinga’s Edge Stock Rankings indicate that AVGO maintains a strong price trend in the long term but a weak trend in the short and medium terms, with a poor growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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