By Nvidia stock (NASDAQ: NVDA) has been bouncing around lately as investors try to figure out what’s next for the AI chip king.
But Broadcom’s monster earnings report on Thursday might be exactly what Nvidia bulls needed to hear as solid proof that the AI infrastructure buildout is far from over and demand for specialized chips is still going strong.
Broadcom’s earnings: A powerful signal for the AI chip industry
Broadcom crushed their third-quarter numbers, posting $16 billion in revenue, a 22% jump from last year that beat analyst expectations handily.
Their adjusted EBITDA climbed 30% to $10.7 billion, showing they’re not just growing but doing it profitably.
The real standout was their AI semiconductor division, which saw revenue surge 63% year-over-year to $5.2 billion.
CEO Hock Tan wasn’t shy about the outlook either, predicting AI-related sales will hit $6.2 billion next quarter.
That would mark eleven straight quarters of growth in their AI business, driven by customers who can’t seem to get enough custom AI accelerators.
The company has locked up over $10 billion in orders for AI rigs based on their XPUs, which gives them serious visibility into future demand.
What makes this particularly relevant for Nvidia stock is that Broadcom’s success validates the entire AI infrastructure story.
When a major chip company reports a $110 billion order backlog and $7 billion in free cash flow, it signals that tech giants and cloud providers are still spending heavily on AI hardware.
Since Nvidia dominates the GPU side of this market, Broadcom’s momentum should translate into continued strength for Nvidia’s core business.
The infrastructure software segment also grew 17% year-over-year, helped by VMware’s cloud offerings that support AI workloads.
While Broadcom’s traditional semiconductor business is still recovering slowly, the AI boom is more than making up for any weakness elsewhere.
Nvidia stock: Why analysts are optimistic
Analysts are viewing Broadcom’s results as confirmation that the AI chip cycle has real legs.
The analysts pointed out that Broadcom’s numbers show insatiable demand for AI hardware across hyperscale data centers, which directly benefits Nvidia as the leading GPU supplier.
The thinking is that Nvidia stock should see renewed investor interest as these trends become clearer.
But there are still reasons for caution. Nvidia’s valuation remains pretty stretched, even after recent volatility, and the company faces headwinds from potential interest rate moves, supply chain issues, and increasing competition.
Companies like AMD and Intel are trying to chip away at Nvidia’s dominance, while newer players are developing specialized AI chips that could eventually challenge Nvidia’s market position.
The broader question is whether Nvidia can convert its current AI leadership into sustained profitability and market share gains.
Broadcom’s results suggest the opportunity is definitely there, but execution will be key. Nvidia needs to keep innovating while managing the operational challenges that come with explosive growth in a rapidly evolving market.
For now, Broadcom’s blockbuster quarter provides a helpful data point suggesting the AI infrastructure buildout is real and sustainable, which should benefit Nvidia’s business over the coming quarters.
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