Broadcom recently released its quarterly results, which showed strong performance across both AI Semiconductor and networking segments. While the stock is expected to pull back despite a good quarter, there are several reasons why investors should remain bullish on the company.

Firstly, AI Semiconductor revenue and guidance were significantly above Street expectations, indicating ongoing momentum in this segment. The company announced its fifth XPU customer (not OpenAI) for early revenue in FY26, and noted that Anthropic (its fourth XPU customer) has placed an additional $11 bn order for FY26. This suggests that Broadcom’s custom silicon is in high demand for AI applications.

However, management did not update its prior guidance for 40%-60% AI revenue growth in FY26, despite indicating that AI revenue is accelerating from 65% growth in FY25 and guiding for ~100% growth in Q1. While this may be viewed as disappointing by some investors, we believe it’s a positive sign that the company is focusing on sustained outperformance rather than short-term growth. Our checks suggest that Broadcom’s AI revenue will continue to grow at an impressive rate in FY26, and we would be buyers of the stock on any weakness.

Our confidence in Broadcom’s dominant position in custom silicon is increasing, as it enables low-cost inference for a number of hyperscalers and model builders – most notably Google – in a way that can drive sustained outperformance for Broadcom’s AI business relative to peers. With the company’s strong execution and growing demand for its products, we reiterate our Buy rating on Broadcom.