So, you know how everyone’s obsessed with the “Magnificent 7” tech stocks? Well, plot twist: there might need to be room for an 8th member at the cool kids’ table, and it’s not who you’d expect.
Meet Broadcom (NASDAQ: AVGO) – the chip company that’s been quietly crushing it while everyone else was busy staring at Nvidia’s flashy performance. This week, Broadcom’s stock jumped 10% after dropping some seriously impressive Q3 numbers, and honestly? It’s about time people started paying attention.
Here’s the tea: Broadcom just posted record revenue of $15.95 billion, beating estimates and growing 22% year-over-year. But the real kicker? Their AI chip revenue exploded by 63%, now making up about a third of their total revenue. That’s not just growth – that’s “hold my beer” level performance.
The company also pulled in $4.1 billion in net income (85 cents per share), which is a massive turnaround from last year’s $1.9 billion loss. Sure, that loss was mostly due to a one-time tax hit, but still – going from red to green that dramatically is pretty sweet.
The $10 Billion Mystery Customer
Now here’s where it gets juicy. CEO Hock Tan casually mentioned they’ve got a new “hyperscaler” customer who just dropped $10 billion in orders for AI chips. Ten. Billion. Dollars. That’s not pocket change – that’s “we’re building the future” money.
While Tan didn’t name names (because CEOs love their dramatic mystery), analysts are pretty convinced this mystery customer is OpenAI. Makes sense, right? OpenAI needs serious computing power, and Broadcom makes the custom chips that power AI dreams.
This puts Broadcom in some pretty elite company – their other custom AI customers include Meta, Google, and ByteDance. Not exactly a shabby client list.
Looking Ahead: More Growth on the Horizon
Broadcom isn’t slowing down either. They’re targeting 19% growth in AI chip revenue for Q4, expecting to hit $6.2 billion. Total Q4 revenue? They’re shooting for $17.4 billion, up from their previous guidance of $15.8 billion.
Wall Street is eating this up. Analysts are throwing around price targets of $400+ per share (it’s currently trading around $334). Sure, the P/E ratio of 111 looks scary, but the forward P/E of 36 based on expected earnings is much more reasonable.
The bottom line? While everyone’s been watching Nvidia dominate the AI chip headlines, Broadcom has been quietly building an empire in custom AI accelerators. They’re not competing directly with Nvidia – they’re creating their own lane and absolutely crushing it.
Sometimes the best investments are the ones hiding in plain sight. Broadcom might just be that stock – the one that makes you look smart for noticing it before everyone else jumped on the bandwagon.