Broadcom (AVGO) is experiencing a significant divergence between its fundamental performance and stock price. While AI semiconductor revenue surged 221% year-over-year to $16.7 billion in fiscal Q3, the stock has underperformed, sitting approximately 28% below its 52-week high. Analysts attribute this gap to supply constraints and customer concentration risks, despite strong guidance for $230 billion in AI revenue by fiscal 2028.
Broadcom CEO Hock Tan projects AI semiconductor revenue will double to $115 billion in 2027 and again to $230 billion in 2028. Despite this aggressive growth trajectory, the stock trades at a forward P/E of 19x, significantly lower than peers like NVIDIA and AMD. Analysts view the current price as undervalued, though supply constraints remain a key risk.
Broadcom reported $16.7 billion in AI semiconductor revenue for Q3 FY2026, a 221% year-over-year increase. CEO Hock Tan projects AI revenue will reach $115 billion in fiscal 2027 and $230 billion in fiscal 2028. The company launched VMware Private AI Cloud and secured a design win with OpenAI's 'Jalapeno' accelerator, which outperforms NVIDIA GPUs at half the cost for inference. Free cash flow hit $13.67 billion, and the company raised its dividend for the 15th consecutive year.
Broadcom (AVGO) delivered a strong Q3 FY2026: non-GAAP EPS of $3.32, up 96% year over year, on revenue of $29.59 billion, up 85% and above estimates. AI-driven demand dominated results, with AI semiconductor revenue up 221% to $16.7 billion (56% of total) and XPUs accounting for 73% of AI revenue; AI networking up more than 2.5x. Semiconductor Solutions revenue rose 127% to $20.84 billion, with a 61% operating margin, while Software revenue grew 29% to $8.75 billion with an ~84% software margin. Free cash flow hit a record $13.7 billion; cash from operations was $14.2 billion and capex $532 million. Broadcom also highlighted AI accelerators and hardware partnerships (Ironwood TPU v7, TPU v8i, Jalapeno) and guided for Q4 revenue around $34.8 billion, with AI semis about $21.7 billion, and raised its AI semiconductor revenue outlook for FY2026 to $58 billion; long-term targets point to substantial AI semiconductor growth through 2028. Zacks ranks the stock Hold.
Broadcom delivered a strong earnings beat with revenue of $29.59 billion (up 86% year over year) and adjusted EPS of $3.32 (up 96%), driven by hyperscaler demand for AI chips and networking gear. The company forecast a massive AI semiconductor footprint, citing roughly $350 billion in chip shipments to six hyperscalers over the next two years, a bullish stance similar to recent moves by Dell and Nvidia. Despite the results, Broadcom’s stock traded lower in premarket action as investors digest the outlook; JPMorgan maintained a positive view on AVGO.
Broadcom topped Q3 with revenue up 86% to $29.6B and AI semiconductors at $16.7B, but it guided Q4 revenue to about $34.8B (below consensus), sending AVGO down roughly 4% after hours. The firm remains a key AI hardware player, highlighting private funding partnerships with Apollo and Blackstone to finance compute expansion, while facing intensifying competition from Marvell and MediaTek and ongoing bullish investor sentiment in some circles.
Broadcom guides Q3 revenue of about $29.4 billion (+84% YoY) with AI semiconductors near $16 billion (up >200% YoY); gross margin is expected to fall to about 74% due to a heavier AI-chip mix, while non‑AI semiconductors and VMware software remain growth drivers. The consensus is about $29.47 billion in revenue and $3.22 per share. AI demand from Google, Anthropic, OpenAI and Meta supports long‑term growth, but the stock faces risk from margin pressure and a rich valuation ahead of the results.
Broadcom is set to report fiscal Q3 results after Sept. 2, with management aiming for about $16 billion in AI semiconductor revenue (up over 200% year‑over‑year). After a strong Q2 driven by AI demand, the stock has lagged the market this year, and investors will scrutinize sustained AI growth and Q4 guidance. The Alphabet–Marvell TPU deal has raised questions about Broadcom’s competitive position, but analysts say it may reflect broader supplier relationships rather than Broadcom-specific pressure. If Broadcom confirms the $16B target and issues a constructive Q4 outlook, the shares could regain momentum.
Broadcom’s AI semiconductor revenue now dominates its quarterly mix (about 49–54%), but the business hinges on six core customers rather than a broad customer base. Key commitments include a long-term OpenAI deployment (1.3 gigawatts in 2027) and Meta’s MTIA X through 2028, with AI bookings far exceeding actual shipments. Management signals that networking remains a growing but shrinking share of the AI line, implying higher concentration risk even as the company remains profitable and valued on a high sales multiple. For investors, the question is whether the stock’s premium is justified by diversification or by a few large buyers driving most future revenue.
Broadcom topped Q1 expectations with revenue of $22.19B and adjusted EPS of $2.44, driven by AI semiconductors (AI revenue $10.8B, up 143% YoY). Gross margin slipped about 32 basis points as AI-chip mix grew, while operating margin was 48.6%. The company guided Q2 revenue to about $29.4B. In the call, top analysts pressed on AI backlog, the Google agreement, margin dynamics, wafer/HBM supply, and 2027 gigawatt targets, with CEO Hock Tan and CFO Kirsten Spears providing clarifications. Shares fell as investors digest the mix shift and margin outlook, alongside VMware software adoption and capacity considerations.
Broadcom posted a strong Q2 with revenue of $22.19B (+48% YoY) and AI semiconductors revenue of $10.8B (+143%), plus a record free cash flow of $10.3B and EBITDA margin of 69%, but the stock dropped after management guided Q3 AI revenue to $16B (about $1.2B below expectations) and chose not to raise its long-term AI target of over $100B for 2027, signaling a catalyst gap despite solid fundamentals; Q3 revenue guidance of $29.4B beat consensus, and analysts were mixed on the stock’s path, with some raising targets and others downgrading.
Broadcom posted Q2 revenue of $22.2B (up 48% YoY), led by AI semiconductor revenue of $10.8B (up 143% YoY); gross margin fell to 77.1% as the mix shifts toward semiconductors. The company guided Q3 revenue to $29.4B and AI semiconductor revenue to about $16B, with AI bookings totaling around $30B, signaling continued AI-driven growth though margins remain under pressure; Google/Anthropic/OpenAI have long-term deals, and free cash flow reached $10.3B.
Broadcom posted a record Q2 revenue of $22.2 billion, up 48% year over year, with a 67% operating margin and $10.3 billion in free cash flow. AI semiconductors led the growth, delivering $10.8 billion in AI revenue (up 143%), prompting a stronger outlook: Q3 AI semiconductor revenue of $16 billion and full-year AI revenue of about $56 billion, with AI revenue potentially exceeding $100 billion in fiscal 2027. Networking remains a key AI driver (about 40% of AI revenue in Q2, expected to normalize toward 30%), while Infrastructure Software rose 9% to $7.2 billion and VMware Cloud Foundation 9.1 gained traction. Gross margin was 77.1%, cash on hand rose to $19.6 billion, and free cash flow was $10.3 billion. For Q3, Broadcom guided revenue of $29.4 billion with roughly 74% gross margin and about 67% operating margin (~68% EBITDA). CFO Kirsten Spears will retire mid-June; Amie Thuener will become CFO. The company highlighted long-term AI partnerships with Google, Anthropic, OpenAI, and Meta as part of sustained AI data-center demand.
Broadcom reported Q2 revenue of about $22.2 billion (up ~48% year over year) with adjusted earnings per share around $2.44, roughly in line with expectations. For Q3, the company pegged revenue at about $29.4 billion and EBITDA near 68% of revenue, a guide below the top end of analyst estimates, which sent AVGO lower in after-hours trading by roughly 6%. Management cited AI-related semiconductor demand as a key growth driver and even projected AI semiconductor revenue to grow more than 200% year over year to about $16 billion in Q3. The stock had previously surged on mega-deals for custom chips with Anthropic, Meta and Alphabet, but investors remain cautious as the AI demand outlook competes with the softer near-term guidance.
Broadcom reported Q2 FY2026 revenue of $22.187 billion (up 48% year over year) with GAAP net income of $9.31 billion and non-GAAP net income of $12.074 billion; adjusted EBITDA was $15.244 billion (69% of revenue), and diluted earnings per share were $1.91 GAAP and $2.44 non-GAAP. Cash from operations was $10.493 billion, with free cash flow of $10.262 billion (46% of revenue). The board declared a quarterly dividend of $0.65 per share. For Q3 FY2026, Broadcom guided revenue of about $29.4 billion (up 84% YoY) with non-GAAP operating margin near 67% and adjusted EBITDA around 68% of revenue. AI semiconductors drove Q2 AI revenue to $10.8 billion, up 143% YoY, and the company expects AI revenue to reach about $16.0 billion in Q3, signaling continued strong AI-related demand.
