Broadcom (AVGO) Delivers Record Q3 Revenue of +86% as AI Sales Jump +221%, but Q4 Guidance Falls Short
Key Takeaways
- Broadcom reported record third-quarter fiscal 2026 revenue of $29.59 billion, up 86% year over year, narrowly ahead of the roughly $29.2 billion consensus estimate.
- Non-GAAP (adjusted) earnings per share came in at $3.32, up 96% from a year earlier and above the approximately $3.22 analysts expected.
- AI semiconductor revenue surged 221% year over year to $16.7 billion, driven by custom AI accelerators and networking demand.
- Fourth-quarter revenue guidance of about $34.8 billion fell short of the roughly $35 billion consensus, pressuring shares after hours.
- Management raised its longer-term outlook, now expecting AI chip revenue of about $115 billion for fiscal 2027 and roughly $230 billion in revenue by fiscal 2028.
Earnings Context and Why It Matters
Broadcom has become one of the clearest beneficiaries of the artificial intelligence infrastructure buildout, supplying custom AI accelerators and networking silicon to several of the world's largest technology companies. Because AI-related sales now dominate its growth, each quarterly report serves as a real-time read on hyperscaler spending and the durability of the AI investment cycle. The fiscal third quarter was expected to show a sharp acceleration from prior periods, making the report an important test of whether Broadcom's AI momentum could keep pace with an increasingly optimistic market. The results also carry broader implications for the semiconductor industry and for investor confidence in AI-driven earnings growth. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
For the third quarter of fiscal 2026, which ended August 2, Broadcom posted net revenue of $29.59 billion, an 86% increase from $15.95 billion in the prior-year period and slightly above the consensus estimate of about $29.2 billion. Non-GAAP diluted earnings per share (EPS) reached $3.32, up 96% year over year and ahead of the roughly $3.22 analysts had projected. On a GAAP (Generally Accepted Accounting Principles) basis, net income was $13.09 billion, with diluted EPS of $2.68, compared with $0.85 a year earlier.
Segment results highlighted the shift in the company's mix. Semiconductor Solutions revenue rose 127% to $20.84 billion, while Infrastructure Software revenue grew 29% to $8.75 billion. Within semiconductors, AI revenue climbed 221% year over year to $16.7 billion. Operating cash flow reached $14.2 billion, up 98%, and free cash flow (cash from operations minus capital expenditures) was $13.67 billion. The company also declared a quarterly dividend of $0.65 per share.
Market Reaction and Investor Sentiment
Despite beating on both revenue and adjusted EPS, AVGO shares initially dropped more than 6% in after-hours trading, with the decline later narrowing. The selloff reflected a classic "sell the news" dynamic: investors had bid the stock up in anticipation of a blowout quarter, and the fourth-quarter revenue guide of approximately $34.8 billion landed below the roughly $35 billion Wall Street had modeled. The strong top-line growth and record results were not enough to satisfy an already-elevated bar, underscoring how high expectations had become heading into the print. Sentiment remains broadly positive on the company's AI pipeline, but the guidance shortfall tempered immediate enthusiasm.
Forward Outlook and Key Factors to Monitor
Broadcom guided to fourth-quarter fiscal 2026 revenue of approximately $34.8 billion, which would represent roughly 93% year-over-year growth. Within that, management expects AI semiconductor revenue to accelerate to about $21.7 billion, up 236% year over year, while non-GAAP operating margin is projected at around 66% of revenue. Investors will be watching whether the company can deliver on that margin target as the AI mix grows and as it scales production for large custom accelerator programs.
Longer term, management raised its AI revenue outlook for the fiscal year ending October 2027 to about $115 billion, up from a prior forecast of more than $100 billion, and indicated revenue could roughly double to around $230 billion by fiscal 2028. Key factors to monitor include the pace of customer deployments across custom AI chips, the balance between AI and non-AI semiconductor demand, and software segment growth. Cost trends, margin sustainability, and the ability to convert strong bookings into shipped revenue will also be central to the stock's next move. From what I see, these longer-term targets remain a focal point for anyone tracking AI infrastructure spending.
Leveraging AI Tools in My Research
One resource I turn to when analyzing names like AVGO is Tickeron’s AI Screener. It helps filter stocks and ETFs by technical patterns, fundamentals, and AI-driven signals, allowing me to quickly compare semiconductor peers and spot potential ideas across the sector. I’ve used it to refine views on industry trends without replacing my own fundamental work, and it often surfaces details that complement quarterly reports like this one.
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Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
AVGO's MACD Histogram just turned positive
The Moving Average Convergence Divergence (MACD) for AVGO turned positive on September 21, 2026. Looking at past instances where AVGO's MACD turned positive, the stock continued to rise in 49 of 55 cases over the following month. The odds of a continued upward trend are 89%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where AVGO's RSI Oscillator exited the oversold zone, 8 of 12 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 67%.
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 38 of 51 cases where AVGO's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 75%.
Following a +5.49% 3-day Advance, the price is estimated to grow further. Considering data from situations where AVGO advanced for three days, in 272 of 344 cases, the price rose further within the following month. The odds of a continued upward trend are 79%.
AVGO may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 01, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on AVGO as a result. In 61 of 86 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 71%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AVGO declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 61%.
The Aroon Indicator for AVGO entered a downward trend on September 25, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is 15 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 71, placing this stock better than average.
The Tickeron SMR rating for this company is 23 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 49 (best 1 - 100 worst), indicating fairly steady price growth. AVGO’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of 71 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: AVGO's P/B Ratio (16.750) is slightly higher than the industry average of (7.902). P/E Ratio (44.588) is within average values for comparable stocks, (163.223). Projected Growth (PEG Ratio) (0.346) is also within normal values, averaging (3.705). Dividend Yield (0.007) settles around the average of (0.007) among similar stocks. P/S Ratio (18.622) is also within normal values, averaging (45.163).
The Tickeron PE Growth Rating for this company is 89 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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