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Broadcom Projects Strong AI Growth for Fiscal 2026 With $10B Customer Win

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Broadcom (AVGO.O) forecast a sharp improvement in artificial intelligence revenue for fiscal 2026 after securing more than $10 billion in AI infrastructure orders from a newly signed customer, CEO Hock Tan announced Thursday. The news boosted shares by 4% in after-hours trading, as investors cheered both the order and Tan’s commitment to remain at the helm for at least another five years.

Earlier this year, Tan hinted at four potential new partners exploring custom chip development with Broadcom. One has now placed a firm order, officially joining its roster of clients. While Broadcom did not disclose the name, analysts see the deal as another sign of cloud giants seeking alternatives to Nvidia’s dominant but costly GPUs.

Broadcom has positioned itself as a key enabler of generative AI, designing custom silicon to help hyperscalers overcome performance bottlenecks. “Custom offerings for cloud giants are well-positioned as Big Tech races to push model training and inference forward,” said Emarketer analyst Jacob Bourne, noting that while Nvidia remains the default choice, bespoke chips offer niche performance advantages.

The company’s AI revenue grew 63% to $5.2 billion in the third quarter ended August 3 and is projected to rise to $6.2 billion in Q4. Broadcom has also expanded its portfolio with new networking products, including the Tomahawk Ultra and next-generation Jericho chips, both aimed at accelerating AI computing workloads.

Despite booming AI demand, Tan acknowledged softness in the company’s non-AI semiconductor units, particularly in enterprise networking and service storage. Even so, Broadcom guided for fourth-quarter revenue of about $17.4 billion, above Wall Street’s estimate of $17.01 billion.

Broadcom shares have gained nearly 82% since April, extending a threefold surge over the past two years, while Nvidia stock is up 27% in 2025.

Applied Materials Shares Drop on Weak China Demand and Tariff Uncertainty

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Applied Materials (AMAT.O) shares fell roughly 12% in Friday morning trading after the chip-equipment maker issued a disappointing revenue and profit forecast, raising investor concerns about the impact of U.S.-China trade tensions on demand. The decline follows warnings from Dutch rival ASML (ASML.AS), highlighting continued uncertainty over the effects of U.S. tariffs on the semiconductor industry.

CEO Gary Dickerson cited “wide-ranging implications for the semiconductor industry” during a post-earnings call, pointing to lower visibility and heightened uncertainty in the near term due to dynamic policy developments. China, which represented 35% of Applied Materials’ July-quarter sales, has become a key risk as U.S. export restrictions weigh on new equipment orders.

Smaller peer KLA Corp (KLAC.O), which also has a strong presence in China, expects softer demand amid ongoing Sino-U.S. trade tensions, while Deutsche Bank strategists warned that volatility in China is clouding visibility into earnings potential both geopolitically and cyclically.

Applied Materials forecast fourth-quarter revenue of $6.70 billion, plus or minus $500 million, below analysts’ consensus of $7.33 billion. Its projected profit also fell short of expectations. If losses persist, the company could shed over $18 billion from its $151.06 billion market value as of Thursday’s close.

J.P. Morgan analyst Harlan Sur suggested that the slowdown in China reflects timing of spending rather than structural weaknesses. Applied’s stock has risen 1.2% year-to-date, trailing the Nasdaq (.IXIC) up 12.3% and the S&P 500 (.SPX) up 10%.

Shares of other chip-equipment makers, including KLA Corp and Lam Research (LRCX.O), also fell following Applied’s results, down 5.5% and 4.3%, respectively. Applied reported third-quarter revenue of $7.30 billion, up 8% year-on-year and above the $7.22 billion consensus. Its stock trades at a forward price-to-earnings ratio of 19, lower than ASML’s 26.04, Lam’s 23.56, and KLA’s 26.82.

Trump Administration Explores Potential Stake in Intel Amid Push for Domestic Chip Manufacturing

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The Trump administration is reportedly in discussions with Intel (INTC.O) to potentially acquire a stake in the U.S. chipmaker, Bloomberg News reported on Thursday, citing sources familiar with the talks. The move would be another example of President Donald Trump’s interventions in industries considered critical to national security. In the past, Trump has promoted multibillion-dollar government partnerships in semiconductors and rare-earth minerals, including a deal with Nvidia (NVDA.O) and an arrangement with MP Materials.

Intel declined to comment on the report but reaffirmed its commitment to supporting the administration’s efforts to bolster U.S. technology and manufacturing leadership. White House spokesman Kush Desai cautioned that discussions about “hypothetical deals” should be viewed as speculation until officially announced.

Intel shares rose more than 7% during regular trading and added another 2.6% in after-hours trading. The discussions follow a recent meeting between Trump and Intel CEO Lip-Bu Tan, occurring just days after Trump publicly called for Tan’s resignation over his investments in Chinese technology firms, some of which have ties to the Chinese military. Details about the size of the stake and pricing are still under negotiation.

Analysts suggest the government stake would likely aim to support Intel’s domestic manufacturing expansion and job creation. Intel has previously warned it may need to exit chip manufacturing without sufficient external customers and has planned to slow construction on new Ohio factories. CEO Lip-Bu Tan, in his role for just over six months, has been tasked with reversing years of setbacks that left Intel behind in the fast-growing AI chip market dominated by Nvidia.

Market experts note that any potential deal could include tariffs designed to encourage major clients like Nvidia, AMD (AMD.O), and Apple (AAPL.O) to utilize Intel Foundry services. While government stakes in companies are not unprecedented, some investors question whether Intel, with stable revenue exceeding $50 billion annually despite a loss in industry leadership, requires direct government investment.