In our fiscal Q3 2025, total revenue was a record $16 billion, up 22% year-on-year. Revenue growth was driven by better-than-expected strength in AI semiconductors and our continued growth in VMware. Q3 consolidated adjusted EBITDA was a record $10.7 billion, up 30% year-on-year. Looking beyond what we're just reporting this quarter, with robust demand from AI, bookings were extremely strong, and our current consolidated backlog for the company hit a record of $110 billion.
Q3 semiconductor revenue was $9.2 billion, as year-on-year growth accelerated to 26% year-on-year. This accelerated growth was driven by AI semiconductor revenue of $5.2 billion, which was up 63% year-on-year, and extended the trajectory of robust growth to 10 consecutive quarters. Let me give you more color on our XPU business, which accelerated to 65% of our AI revenue this quarter. Demand for custom AI accelerators from our three customers continued to grow, as each of them journeys at their own pace towards compute self-sufficiency.
Reflecting this, we now expect the outlook for our fiscal 2026 AI revenue to improve significantly from what we had indicated last quarter. Turning to AI networking, demand continued to be strong because networking is becoming critical as LLMs continue to evolve in intelligence, and compute clusters have to grow bigger. Over the past two years, we have deployed our Jericho 3 Ethernet router with hyperscale customers to just do this. Turning to our forecast, as I mentioned earlier, we continue to make steady progress in growing our AI revenue.
| Metric | Period | Current guidance |
|---|---|---|
| Consolidated revenue | Q4 FY2025 | ~$17.4B, up 24% YoY |
| Semiconductor revenue | Q4 FY2025 | ~$10.7B, up 30% YoY |
| AI semiconductor revenue | Q4 FY2025 | ~$6.2B, up 66% YoY |
| Infrastructure software revenue | Q4 FY2025 | ~$6.7B, up 15% YoY |
| Non-AI semiconductor revenue | Q4 FY2025 | ~$4.6B, up low double digits sequentially |
| Adjusted EBITDA margin | Q4 FY2025 | ~67% of revenue |
| Consolidated gross margin | Q4 FY2025 | down ~70 bps sequentially on higher XPU and wireless mix |
| Non-GAAP tax rate | Q4 FY2025 / FY2025 | 14% |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +22% | Better-than-expected strength in AI semiconductors plus continued VMware growth. |
| AI semiconductor revenue | +63% | Growing custom XPU demand from three (now four) hyperscale/LLM customers on their path to compute self-sufficiency. |
| Semiconductor revenue | +26% | Acceleration driven by AI, offsetting flat non-AI semiconductors. |
| Infrastructure software revenue | +17% | Strong VMware VCF bookings; total contract value over $8.4 billion. |
| Adjusted EBITDA | +30% | Revenue growth and operating leverage. |
| Operating income | +32% | Record $10.5 billion; operating margin 65.5%, up 20 bps sequentially on operating leverage. |
| Software operating margin | 67% to 77% | Completion of VMware integration. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Custom XPU customer count | 3 production customers | 4 customers after qualifying a fourth with over $10 billion of AI rack orders | — |
| Fiscal 2026 AI revenue outlook | Grow ~50-60% year-on-year (mirroring 2025) | Expected to accelerate above 2025's rate; a fairly material improvement | — |
| AI networking mix | Networking a larger share of AI revenue | Networking expected to be a declining percentage in 2026 as XPUs dominate the mix | — |
| VMware / VCF conversion | ~87% of top 10,000 accounts adopted VCF | Over 90% have purchased VCF; second phase is enabling full private-cloud deployment | — |
| AI networking products | Tomahawk 5, Jericho 3 deployed | Launched Tomahawk 6 (102 Tbps) and Jericho 4 (51.2 Tbps) for scale-up, scale-out and scale-across | — |