Broadcom Just Named Its Next Customer to Pass Google: Anthropic. Here's Why That Matters More Than the Earnings Beat.

After the market closed on Sept. 2, Broadcom (NASDAQ: AVGO) published results for the third quarter of its 2026 fiscal year, which ended May 2. The company reported non-GAAP (adjusted and not in accord with generally accepted accounting principles) earnings per share (EPS) of $3.32 on revenue of $29.59 billion, exceeding the average Wall Street analyst targets for adjusted EPS of $3.24 on sales of $29.36 billion.

The stock actually fell on the heels of the company's report due to high expectations and a company forecast for sales of $34.8 billion in the current quarter, falling short of the average target for sales of $35.03 billion in the period. But while investors treated the shortfall as more important than the Q3 sales and earnings beats, Broadcom's statement that sales to Anthropic are on track to surpass sales to Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google division looks more significant than both of these factors.

Image source: Getty Images.

Broadcom expects a huge increase for purchases from Anthropic

In the company's fiscal Q3 conference call, Broadcom outlined expectations for sales to Anthropic to expand dramatically. Anthropic is the company behind Claude -- the frontier artificial intelligence (AI) model that has made waves with its coding and content-creation capabilities. Anthropic is expected to have its initial public offering (IPO) this year, and the company is one of the most influential players in the broader AI software sector.

Broadcom anticipates that Anthropic will become the largest purchaser of its XPU hardware in 2027. Alphabet is currently the company's largest customer, but orders from Anthropic are ramping up, positioning the top customer to shift before long.

Broadcom is already shipping its Ironwood Tensor Processing Unit (TPU) to both Alphabet and Anthropic, but it specifically called out expectations for accelerating product shipments in this category to Anthropic in its fiscal fourth quarter. Although the Ironwood architecture was designed in conjunction with Alphabet, Broadcom expects that Anthropic will become an even bigger buyer of chips in the broader family -- with expectations for Anthropic's purchase of Ironwood TPU version 8i compute to expand from 1 gigawatt in 2026 to 5 gigawatts in 2027.

Broadcom's custom AI chip business is booming. Notably, Broadcom also anticipate substantial ramping up of 8i shipments to Alphabet. It also expects a huge increase in sales to OpenAI, with projected deployment for its Jalapeno XPU chips to the ChatGPT company projected to increase from 1.3 gigawatts in 2027 to 5 gigawatts in 2028.

The key takeaway is that Broadcom is seeing very strong demand from its custom chip customers, and Anthropic moving into the top purchasing spot is not at all an indication that other top customers are spending elsewhere. With these tailwinds at its back, Broadcom projected adjusted EPS of more than $30 in fiscal 2028, which is far ahead of the average estimate of $25. So while the market didn't have a strong bullish reaction to the company's fiscal Q3 report and forecast, the demand outlook continues to be very encouraging.

Broadcom retains a forefront position in the AI infrastructure market

Along with its leading position in networking chips that support AI data centers, Broadcom's leadership in highly efficient custom AI processors positions the company to post continued wins in conjunction with AI infrastructure build-outs. The company's networking chips should allow it to continue benefiting from data centers built around Nvidia's ultra-high-end graphics processing units, and its more task-specific processor designs have it on track to benefit from other areas of the evolving AI compute stack.

Crucially, the company's wins with AI category leaders, including Anthropic, Alphabet, and OpenAI, suggest that Broadcom continues to be a leading pick-and-shovel play in the artificial intelligence hardware market with strong customer diversification. The company's sales mix among leading AI compute players will continue to shift, but the dramatic purchasing increase from Anthropic looks like a clear positive.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.