BROADCOM (AVGO) reported fiscal 2026 third-quarter results on Sept. 2, with revenue surging 86 percent year over year to $29.6 billion. AI chip revenue specifically increased 221 percent year over year, reaching $16.7 billion. Non-GAAP earnings doubled to $3.32 per share.
For fiscal Q4, the company projects AI revenue will climb 236 percent year over year to $21.7 billion, with overall revenue up 93 percent to $34.8 billion. Full-year fiscal 2026 AI revenue is expected to reach $57.6 billion—a 186 percent increase from the prior year.
Wall Street expected Q4 guidance of $35.1 billion. Broadcom's $34.8 billion forecast caused the stock to trade lower despite the beat on Q3 and the AI acceleration.
The disconnect matters: Broadcom manufactures custom application-specific integrated circuits (ASICs) and networking processors essential to hyperscale AI data center buildouts. These are not commodity parts—they are high-margin, customer-locked components for Nvidia GPUs and custom AI infrastructure.
Context on AI capex: Nvidia estimates the five largest cloud providers will collectively deploy $800 billion in capex in 2026 and $1.3 trillion in 2027. Total AI capex across the industry could reach $3 trillion to $4 trillion by 2030. Broadcom's $57.6 billion AI revenue for fiscal 2026 represents just 2 percent of that $3 trillion to $4 trillion addressable market, leaving room for multi-year growth.
The valuation setup: The PHLX Semiconductor index has gained 97 percent over the past year. Broadcom stock is flat. A company growing AI revenue 186 percent year over year while trading in line with the broader index—which includes slower-growth chipmakers—trades at a discount to the growth it is delivering. With a clear multiyear capex cycle ahead and pricing power on custom silicon, Broadcom has visibility into sustained triple-digit AI growth through 2027.
