Broadcom's AI Revenue Is Growing at 221%. Here's Why Custom Chips Could Be a Bigger Business Than GPUs.
Broadcom's AI semiconductor revenue surged 221% year-over-year in Q3, driven by custom AI accelerators (XPUs) designed with hyperscalers like Google, Meta, and OpenAI. Custom chips offer better power efficiency, faster inference, and higher returns on capital compared to GPUs, making them increasingly attractive as hyperscalers face capital constraints. While Nvidia's data center business is currently 4x larger, custom silicon is winning by volume among major customers and could eventually become a bigger business than GPUs.