Remember when everyone was obsessing over the “Magnificent 7” tech stocks? Well, plot twist: there’s an eighth player that’s been quietly crushing it while everyone else was busy arguing about Tesla’s latest Elon tweet.
Meet Broadcom (NASDAQ: AVGO) – the chip company that just pulled off what might be the most impressive earnings surprise of the year. While you weren’t looking, this semiconductor giant jumped 10% on Friday after dropping some seriously impressive Q3 numbers that had Wall Street doing double-takes.
The Numbers Don’t Lie (Unlike Your Ex)
Here’s what happened: Broadcom just posted record revenue of $15.95 billion – that’s a 22% jump from last year and beat analyst estimates. But here’s the kicker: their AI-related revenue shot up 63%, now making up about a third of their total business. That’s like going from selling lemonade on weekends to running a beverage empire.
The real mic-drop moment? Net income jumped to $4.1 billion, compared to a $1.9 billion loss last year. (Don’t worry, that loss was just some boring tax stuff – think of it as paying off your student loans in one brutal year.)
The Mystery Customer Worth $10 Billion
Now here’s where it gets juicy. CEO Hock Tan casually mentioned they’ve got a new “hyperscaler” customer who just committed to $10 billion worth of AI chip orders. Ten. Billion. Dollars.
While Tan played it coy about who this mystery customer is, analysts are placing their bets on OpenAI. Makes sense – they’re basically printing money with ChatGPT and need serious hardware to keep up with everyone asking it to write their homework.
This puts Broadcom in an exclusive club with just four major AI customers: Meta, Google, ByteDance, and now presumably OpenAI. It’s like being invited to the cool kids’ table, except the lunch money is measured in billions.
What’s Next? More Green Numbers
Broadcom isn’t slowing down. They’re projecting AI semiconductor revenue of $6.2 billion in Q4 – that’s another 19% jump. Total revenue is expected to hit $17.4 billion, up from their previous guidance of $15.8 billion.
Wall Street is eating this up like free pizza at a college dorm. Multiple analysts bumped their price targets, with some going as high as $400 per share. The stock’s currently trading around $334, so there’s still room to run.
The Bottom Line
While everyone’s been obsessing over Nvidia (which, fair enough, they’re crushing it too), Broadcom has been quietly building an AI empire. They’ve got the customers, the contracts, and the cash flow to prove it.
Sure, the P/E ratio of 111 might make value investors break out in hives, but the forward P/E of 36 looks much more reasonable. Sometimes you pay up for quality – and right now, Broadcom is serving up some premium AI infrastructure.
The moral of the story? Sometimes the best opportunities are hiding in plain sight, making chips while everyone else is making noise.