Broadcom's AI Chip Boom Surges, Yet Q4 Guidance Keeps Rally Cautious

Broadcom posted strong Q3 results with revenue up 86% year over year to $29.6 billion, adjusted operating income up 92% to $20.1 billion, and adjusted EPS up 96% to $3.32, while free cash flow rose 95% to $13.7 billion. AI chip revenue jumped 221% to $16.7 billion, and management expects AI semiconductor revenue to reach about $115 billion in FY2027, with demand currently exceeding supply. Despite the upbeat fundamentals, the stock fell after a conservative Q4 revenue guide of $34.8 billion. At about 19.3x forward earnings, Broadcom trades slightly below the IT sector average, supporting a constructive long-term outlook given its AI chip momentum and long‑term deals with Meta and Alphabet.