Broadcom Earnings Preview: Can AI Chip Growth Send AVGO Stock to Another Record?

Key Takeaways

• Broadcom will report its fiscal third-quarter results after the US market closes on September 2, followed by an earnings call at 5:00 p.m. ET.
• Wall Street expects approximately $29.5 billion in revenue and adjusted earnings of $3.24 per share.
• Broadcom forecasts more than $16 billion in quarterly AI semiconductor revenue, representing growth of over 200% from a year earlier.
• Investors will focus on custom AI accelerators, networking demand, VMware growth, profit margins and the fiscal fourth-quarter outlook.
• Options traders expect AVGO stock to move approximately 7% after the report, reflecting the high expectations surrounding its AI business.

Broadcom will release its fiscal third-quarter earnings on Wednesday as investors assess whether explosive demand for custom artificial intelligence chips can revive AVGO stock and eventually send it back toward record territory.

Wall Street expects revenue to rise approximately 85% year over year to $29.5 billion, supported by custom AI accelerators, data-center networking products and growth from Broadcom’s infrastructure software business.

Adjusted earnings are forecast to reach approximately $3.24 per share, up from $1.69 in the comparable period last year. However, the scale of the expected growth means that merely matching estimates may not be enough to produce a sustained stock rally.

Investors will want evidence that Broadcom’s AI revenue can continue accelerating into fiscal 2027 without delays, customer concentration problems or significant margin pressure.

When Will Broadcom Report Earnings?

Broadcom will report its fiscal third-quarter 2026 results on Wednesday, September 2, after the US stock market closes.

Management will hold a conference call at 2:00 p.m. Pacific Time, or 5:00 p.m. Eastern Time, to discuss the results and provide its fourth-quarter business outlook. The webcast will be available through Broadcom’s investor relations website.

The quarter ended on August 2, meaning the results will cover demand and shipments during the three months following Broadcom’s strong second-quarter performance.

What Does Wall Street Expect From Broadcom Earnings?

Analyst estimates are closely aligned with Broadcom’s own revenue guidance, leaving limited room for disappointment.

Broadcom guided for approximately $29.4 billion in third-quarter revenue, representing growth of 84% from a year earlier. The company also expects non-GAAP operating income to equal around 67% of revenue and adjusted EBITDA to account for approximately 68%.

Analysts tracked by Visible Alpha expect slightly higher revenue of around $29.49 billion and adjusted earnings of $3.24 per share. All nine analysts included in the survey rated AVGO stock as a “buy” or equivalent, according to Investopedia.

The close alignment between the company’s guidance and Wall Street estimates means the fourth-quarter forecast may matter more than the third-quarter headline figures.

AI Semiconductor Revenue Is the Main Event

Broadcom expects third-quarter AI semiconductor revenue to exceed $16 billion, more than tripling from the same period last year.

That would represent an increase of at least $5.2 billion from the second quarter, when AI semiconductor revenue reached $10.8 billion and grew 143% year over year.

The company’s AI business consists primarily of two areas:

• Custom accelerators, sometimes called XPUs, designed for the specific workloads of major cloud and AI companies;
• Networking and connectivity products that move data between large clusters of AI chips.

Broadcom does not compete with Nvidia solely by offering a general-purpose alternative to its GPUs. Instead, it works directly with large customers to design specialized processors that can deliver better performance or lower operating costs for particular workloads.

These processors are becoming increasingly attractive to hyperscalers seeking greater control over their AI infrastructure and less dependence on a single chip supplier.

In the second quarter, Broadcom’s semiconductor solutions revenue rose 79% year over year to $15.01 billion. The segment accounted for 68% of total company revenue, up from 56% one year earlier.

If AI semiconductor revenue reaches $16 billion as forecast, it will represent more than half of Broadcom’s total quarterly sales.

OpenAI and Meta Partnerships Strengthen the AI Outlook

Several major agreements announced during 2026 support Broadcom’s long-term AI growth narrative.

In June, Broadcom and OpenAI unveiled Jalapeño, a custom intelligence processor designed specifically for large-language-model inference. The chip was developed from design to production in nine months and is expected to support gigawatt-scale data-center deployments beginning in late 2026.

The companies plan to develop multiple generations of processors, networking products and rack-scale systems. Early testing indicates that Jalapeño may deliver improved performance per watt by optimizing compute, memory movement and networking for OpenAI’s models.

Broadcom also expanded its relationship with Meta in April. The companies are collaborating on a 2-nanometer version of Meta’s Training and Inference Accelerator, or MTIA.

The initial commitment exceeds one gigawatt and is expected to develop into a multi-gigawatt deployment over several years. Broadcom is contributing custom silicon, advanced packaging and Ethernet networking technology under an agreement extending through 2029.

The earnings call may provide additional information about when revenue from these programs will become material, how quickly customers are deploying systems and whether production capacity has been secured.

Can Broadcom Maintain Its Profit Margins?

Broadcom’s AI growth is extraordinary, but the changing revenue mix could place pressure on gross margin.

Infrastructure software typically produces higher gross margins than semiconductor hardware. As custom accelerators become a larger proportion of revenue, Broadcom may generate significantly more sales while reporting a lower consolidated gross-margin percentage.

Second-quarter adjusted EBITDA reached $15.24 billion, or 69% of revenue. Free cash flow rose 60% year over year to $10.26 billion, equivalent to 46% of revenue.

For the third quarter, the company expects adjusted EBITDA margin to ease slightly to approximately 68%. Non-GAAP operating margin is forecast to remain at 67%, showing that scale and spending discipline could offset some of the pressure caused by the higher semiconductor mix.

Investors are likely to accept moderate gross-margin compression if Broadcom continues producing rapid revenue growth, strong operating leverage and substantial free cash flow.

A larger-than-expected decline would be more concerning, particularly if management attributes it to higher production costs, advanced packaging constraints or pricing pressure.

VMware Remains Broadcom’s Second Growth Engine

Infrastructure software generated $7.18 billion in second-quarter revenue, up 9% year over year and representing 32% of Broadcom’s total sales.

Although this growth is slower than the expansion in AI semiconductors, VMware provides recurring revenue, high margins and diversification from Broadcom’s largest chip customers.

The company announced VMware AI Factory on August 31, positioning VMware Cloud Foundation as an infrastructure platform for deploying and managing artificial intelligence in private data centers.

The product automates hardware provisioning, model deployment and AI infrastructure management. It also allows enterprises to share GPU resources and run more than 150 commercial and open-source models while keeping sensitive data within private cloud environments.

Investors will watch infrastructure software revenue, annual recurring revenue, customer renewals and VMware Cloud Foundation adoption.

Broadcom must demonstrate that VMware is generating sustainable growth rather than relying primarily on price increases, customer consolidation and cost reductions.

High Expectations Create Risk for AVGO Stock

Broadcom shares closed around $370.34 on August 31, rising 0.4% during a weaker session for the broader stock market.

However, AVGO stock has fallen approximately 25% from its June high. The decline followed a strong multi-year rally and reflected concerns that investors had already priced in much of Broadcom’s expected AI growth.

The options market is pricing in a move of approximately 7% by the end of the earnings week. From a share price near $369, that implies a potential advance toward $395 or a decline below $343.

A move toward $395 would still leave Broadcom below its previous high. Returning to record territory may require more than a modest earnings beat: management would likely need to raise its AI revenue outlook and provide strong visibility into fiscal 2027.

Broadcom also faces a demanding market environment. Marvell shares recently fell despite reporting results and guidance slightly above estimates, showing that investors expect substantial upside surprises from AI semiconductor companies.

Nvidia’s latest results reinforced the strength of AI infrastructure demand, but they also raised concerns about high memory costs, future margins and the amount of capital required to maintain growth.

What Could Move Broadcom Stock After Earnings?

Three broad scenarios could determine the post-earnings reaction:

Bullish Scenario

Revenue exceeds $30 billion, AI semiconductor sales surpass $16 billion by a meaningful amount and fourth-quarter guidance indicates continued acceleration. Stable operating margins and additional information about OpenAI or Meta deployments could push AVGO toward $395 and potentially restart its advance toward previous highs.

Base Scenario

Broadcom reports approximately $29.4 billion to $29.6 billion in revenue, AI sales meet the $16 billion forecast and adjusted EBITDA margin remains near 68%. The stock reaction may depend almost entirely on fiscal fourth-quarter guidance and management’s expectations for 2027.

Bearish Scenario

AI revenue misses the company’s target, gross margins decline more than expected or management identifies delays involving customers, advanced packaging or memory supply. A cautious fourth-quarter outlook could push AVGO below $350, with the options market indicating that approximately $343 is within the expected post-earnings range.

What Investors Should Watch on the Earnings Call

Beyond revenue and adjusted EPS, the most important questions include:

• How quickly can AI semiconductor revenue grow after reaching $16 billion?
• Are the OpenAI and Meta programs progressing according to schedule?
• Has Broadcom secured sufficient wafer, packaging, memory and networking capacity?
• Is AI demand expanding across more customers or becoming increasingly concentrated?
• Can operating margins remain stable as semiconductor revenue becomes a larger part of the business?
• Is VMware Cloud Foundation generating sustainable customer and recurring-revenue growth?
• What revenue and AI growth does management expect in the fourth quarter and fiscal 2027?

Broadcom enters the report with one of the strongest growth forecasts in the semiconductor industry. The central issue is not whether its AI business is expanding, but whether that expansion can continue quickly enough to exceed expectations that have already become exceptionally high.

A strong result could bring AVGO stock closer to its previous record. Reaching a new high, however, will likely require convincing evidence that Broadcom’s $16 billion AI quarter is the beginning of a multi-year acceleration rather than the peak of the current investment cycle.