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Broadcom Q3 FY2026 Earnings — A Small Revenue Beat, with the Stock Decided by FY2027 AI Guidance
2026-09-02 → 2026-09-02·18 companies·6 predictions
?AVGOdirect↑GOOGsupply-chain↑METAsupply-chain↑OPENAIsupply-chain↓MRVLcompetitive?NVDAcompetitive↑TSMsupply-chain↑ANETsupply-chain—ALABcompetitive?APOsupply-chain?BXsupply-chain↑CLSsupply-chain?CSCOcompetitive↑AAPLsupply-chain↓MTKcompetitive↑AMZNsupply-chain↑ANTHROPICsupply-chain↑MSFTsupply-chain
The Call
Main Line
Refresh from version 1: the four chain prints reported from August 26 through September 1 keep the regime at beat and permit an 8.8% uplift over the Q4 mechanical step, but Broadcom's own current tight-guide record sizes Q3 at only 1.0% above its $29.4B guide; the stock's binary remains whether management raises FY2027 AI semiconductor guidance above the standing >$100B wording, which this report assigns a 45% probability.
Free VariablesQ3 total-revenue beat over the $29.4B guide, sized only from Broadcom's two observations at the current tight-guide postureQ3 AI semiconductor beat over the $16.0B guide, sized only from Broadcom's Q1-Q2 FY2026 AI guide recordQ4 FY2026 guidance uplift over the $32.1B mechanical seasonal step, capped by the same-window chain regime
| Metric | Our Estimate | Company Guidance | Consensus | Actual | Error | vs Cons. |
|---|---|---|---|---|---|---|
| RevenueGAAP Guide plus the 1.0% mean beat at the current blind/tight-guide posture. Consensus from Yahoo Finance, read 2026-09-01. | 29,687 USD M | 29,400 USD M | 29,430 USD M | 29591 USD M | +0.32% | 1.7× |
| Gross profitGAAP 74.0% non-GAAP gross margin less the anchored $1,694M cost-of-revenue bridge. | 20,275 USD M | — | — | 20456 USD M | -0.89% | — |
| Gross marginGAAP Derived from GAAP gross profit divided by revenue. | 68.3% | — | — | 69.13% | -1.20% | — |
| Operating profitGAAP 67.0% non-GAAP operating margin less the anchored $4,140M total GAAP bridge. | 15,751 USD M | — | — | 15955 USD M | -1.28% | — |
| Operating marginGAAP Derived from GAAP operating profit divided by revenue. | 53.1% | — | — | 53.92% | -1.52% | — |
| Net incomeGAAP Operating profit less the anchored $658M net non-operating expense, taxed at the anchored Q2 GAAP rate of 8.1%. | 13,871 USD M | — | — | 13088 USD M | +5.98% | — |
| Diluted EPSGAAP GAAP net income divided by the anchored 4,876M diluted shares. The tracked $3.24 Street consensus is non-GAAP and is not placed beside this GAAP line. | 2.84 USD | — | — | 2.68 USD | +5.97% | — |
Business Metrics
AI semiconductor revenue16,267 USD MCompany Guidance 16,000 USD M→ 16700 USD M
Non-GAAP diluted EPS3.35 USD→ 3.32 USD
Non-GAAP gross margin74.0%Company Guidance 74.0%→ 74.99%
Non-GAAP operating margin67.0%Company Guidance 67.0%→ 67.91%
Q4 FY2026 revenue guidance34,900 USD M→ 34800 USD M
FY2027 AI semiconductor guidance raised above standing >$100B wordingnot disclosed45% probability→ RAISED to approximately $115B, replacing the standing >$100B wording; FY2026 AI raised to $58B and FY2028 line of sight approximately $230B
Inputs
guidedQ3 FY2026 total revenue guide$29,400MActual $29,400M (as issued)Broadcom Q2 FY2026 8-K Exhibit 99.1, filed 2026-06-03 and re-read 2026-09-01.
trendRevenue beat over guide+1.0%Actual +0.65%Current blind/tight-guide posture only: Q1 FY2026 beat by 1.1% and Q2 FY2026 by 0.9%. The seven scoreable observations in the eight-quarter table are not pooled because the posture tightened. Chain numbers do not enter this input.
guidedQ3 FY2026 AI semiconductor revenue guide$16,000MActual $16,000M (as issued)Broadcom Q2 FY2026 8-K Exhibit 99.1 and Q2 call, 2026-06-03; re-read 2026-09-01.
trendAI semiconductor revenue beat over guide+1.7%Actual +4.38%Issuer-only current-posture history: Q1 FY2026 $8.4B actual vs $8.2B guide and Q2 FY2026 $10.8B actual vs $10.7B guide.
guidedNon-GAAP gross margin74.0%Actual 74.99%Q2 FY2026 call guidance, 2026-06-03; no range was supplied.
guidedNon-GAAP operating margin67.0%Actual 67.91%Q2 FY2026 8-K Exhibit 99.1, 2026-06-03. This implies non-GAAP opex of 7.0% of revenue. There is no issuer opex band, so there is no high-end/midpoint choice; the exact implied point is used. No acquisition closing or new hiring program was disclosed in the Q2 10-Q or Broadcom 8-Ks through 2026-07-06.
anchoredGAAP-to-non-GAAP cost-of-revenue bridge$1,694MActual $1,735MCarried unchanged from Q2 FY2026: $1,461M acquired-intangible amortization, $223M stock compensation, and $10M restructuring. Broadcom Q2 FY2026 Exhibit 99.1, 2026-06-03.
anchoredGAAP-to-non-GAAP operating-expense bridge$2,446MActual $2,405MQ2 FY2026 GAAP opex $4,627M less non-GAAP R&D and SG&A of $2,181M, carried unchanged. Broadcom Q2 FY2026 Exhibit 99.1, 2026-06-03.
anchoredGAAP net non-operating expense$658MActual $680MQ2 FY2026 interest expense $776M less other income $118M, carried unchanged from the 2026-06-03 Exhibit 99.1.
anchoredGAAP effective tax rate8.1%Actual 14.32%Q2 FY2026 provision $820M divided by pretax income $10,130M, carried unchanged.
anchoredDiluted share count4,876MActual 4,887MQ2 FY2026 actual, carried unchanged.
trendQ4 FY2026 mechanical revenue-guidance step$32,089MActual not observable; the published guide was $34,800MThis call's Q3 estimate multiplied by the mean of Broadcom's Q4 guide steps in FY2024 (+7.1%) and FY2025 (+9.1%). It is a floor, not the published call.
guidedQ4 FY2026 revenue consensus$35,000MActual $35,000M (as read)Yahoo Finance AVGO analysis page, 35 analysts, range $33.43B-$37.01B; read 2026-09-01.
guidedQ4 FY2026 published revenue-guidance call$34,900MActual $34,800M8.8% above the $32.1B mechanical step and just below $35.0B consensus. The positive chain regime permits, but caps, the uplift at 9%; the call remains anchored by Broadcom's $56B FY2026 AI figure and Q3 $16B AI guide.
Breaks If
- → Q3 AI semiconductor revenue is at or below the $16.0B guide; the beat regime is wrong and the Q4 uplift should be removed.
- → Non-GAAP gross margin is below 74.0%; the anchored GAAP bridge understates hardware-mix pressure and the GAAP profit ladder is too high.
- → Q4 total-revenue guidance is below $34.0B; the issuer's FY2026 AI arithmetic is not converting on the expected schedule.
- → The 10-Q discloses a quarter-close acquisition, retention grants, or integration costs not visible in the filings available on 2026-09-01; rebuild the GAAP bridge from the deal and do not use the anchored Q2 bridge.
- → FY2027 AI guidance is explicitly raised above $110B; the base-case behavioural call was too conservative even if the quarter ladder is accurate.
Next-Period Guidance Calllow confidence · scored separately
Q4 FY2026 revenue guidance of $34.9B; FY2027 AI semiconductor guidance remains at the standing >$100B wording in the base case, with a 45% probability of an explicit raise above that figure.→ Q4 FY2026 revenue guidance $34.8B. Errors against the three anchors: published call $34.9B +0.287%, consensus $35.0B +0.575%, mechanical step $32.089B -7.790%. The uplift over the step helped: errorRatio 2.00, above 1.0, so the guidance call continues to be published. FY2027 AI semiconductor guidance WAS raised, to approximately $115B. (—)
Three anchors frozen 2026-09-01: mechanical Q4 step $32.1B, Yahoo Finance consensus $35.0B, published call $34.9B. The same-window chain sets a positive regime and a 9% cap on uplift over the mechanical step. Broadcom's $56B FY2026 AI statement and $16B Q3 AI guide justify taking the uplift; no chain number sizes the Q3 ladder.
Evidence (10)
SIGNAL INTELLIGENCE: Broadcom says AI demand is insatiable and points to $56B FY2026 and >$100B FY2027 AI revenue; skeptical evidence is customer diversification toward Marvell and MediaTek. Same-window official prints support a beat regime but do not resolve Broadcom-specific share or shipment timing.Broadcom Q2 FY2026 call and 8-K Exhibit 99.1, 2026-06-03; Marvell 8-K Exhibit 99.1, 2026-08-27; all re-read 2026-09-01
Q3 guide: revenue $29.4B, AI semiconductor revenue $16.0B, non-GAAP operating margin 67%, adjusted EBITDA margin 68%.Broadcom 8-K Exhibit 99.1, accession 0001730168-26-000051, 2026-06-03; read 2026-09-01
NVIDIA Q2 FY2027 revenue $96.221B, Data Center $89.0B, both up 18% QoQ; Q3 guide $108.0B.NVIDIA 8-K Exhibit 99.1, accession 0001045810-26-000073, 2026-08-26; read 2026-09-01
Marvell Q2 FY2027 revenue $2.739B, $39M above guide midpoint; Q3 guide $3.15B and FY2027/FY2028 revenue outlook raised, with custom acceleration expected in H2 FY2027.Marvell 8-K Exhibit 99.1, accession 0001835632-26-000022, 2026-08-27; read 2026-09-01
Credo Q1 FY2027 revenue $479M, 1.9% above its $470M guide midpoint; Q2 guide midpoint $530M. The print confirms direction while its issuer history, not chain math, explains size.Credo 8-K Exhibit 99.1, accession 0001628280-26-059795, 2026-09-01; read 2026-09-01
Dell Q2 FY2027 AI-server revenue $16.4B, orders $60.9B, backlog $95B; FY2027 AI-server revenue guide raised to $74B.Dell 8-K Exhibit 99.1, accession 0001571996-26-000039, 2026-09-01; read 2026-09-01
TSMC July 2026 revenue NT$467.58B, +5.6% MoM and +44.7% YoY; January-July revenue +37.0% YoY.TSMC Form 6-K, accession 0001046179-26-000471, 2026-08-10; read 2026-09-01
Late-July hyperscaler spending remained expansionary: Alphabet raised 2026 capex to $195B-$205B, Meta raised the floor to $130B-$145B, Amazon called for about $220B, and Microsoft said capacity still lagged demand while its lease-accounting presentation changed.Alphabet Q2 2026 call 2026-07-22; Meta Q2 2026 release 2026-07-29; Amazon Q2 2026 call 2026-07-30; Microsoft FY2026 Q4 call 2026-07-29; read 2026-09-01
No acquisition closing in or immediately before Q3 FY2026 was found. The Q2 10-Q and Broadcom 8-Ks filed through July 6 disclose no new business combination requiring a rebuilt GAAP bridge.Broadcom SEC submissions and filings through 2026-07-06; checked 2026-09-01
Q3 revenue consensus $29.43B and non-GAAP EPS consensus $3.24; Q4 revenue consensus $35.0B and non-GAAP EPS consensus $3.88.Yahoo Finance AVGO analysis page, 37-38 analysts for Q3 and 35-36 for Q4; read 2026-09-01
Positioning Suggestions
→ Wait for proof rather than add before the print: a small Q3 beat is already the base case, and the binary FY2027 AI guidance has only a 45% probability of an explicit raise.
→ Treat a post-print selloff after another >$100B reaffirmation as an entry review only if AI revenue exceeds $16.0B, non-GAAP gross margin is at least 74.0%, and Q4 revenue guidance is at least $34.0B.
→ Trim event risk if the position cannot absorb a guide-driven gap; the ladder is high confidence relative to the FY2027 behavioural call, not a hedge against it.
Predictions
6✓
AVGO Q3 FY2026 total revenue exceeds $29.4B but remains below $30.0B
72%P1
If revenue is at least $29.4B and margins hold, do not treat the small beat alone as an add signal.
✓
AVGO Q3 FY2026 AI semiconductor revenue exceeds the $16.0B guide
75%P2
A miss removes the beat regime and argues for trimming until shipment timing is re-underwritten.
✓
AVGO Q3 FY2026 non-GAAP gross margin is at least 74.0%
55%P3
✓
AVGO guides Q4 FY2026 revenue to at least $34.0B
70%P4
A guide below $34.0B invalidates the positive guidance-uplift call even if Q3 beats.
✓
AVGO raises FY2027 AI semiconductor revenue guidance above the standing >$100B wording
45%P5
A specific raise above $110B plus at least $34.9B Q4 revenue guidance is the cleanest add signal; a reaffirmation is not.
○
AVGO's Q3 10-Q or earnings call quantifies new AI-infrastructure guarantee exposure beyond the previously discussed initial structure
30%P6
Key Questions
- Does management replace the standing FY2027 AI semiconductor guidance of >$100B with a higher explicit figure?
- Does AI semiconductor revenue exceed $16.0B and does total revenue clear $29.4B by roughly 1%, consistent with the current tight-guide posture?
- Does non-GAAP gross margin hold 74.0% as AI hardware becomes a larger share of revenue?
- Does Q4 FY2026 revenue guidance land near $34.9B, and how much of it is AI semiconductor revenue?
- Does the 10-Q disclose any new acquisition, retention award, integration cost, or AI-infrastructure guarantee that invalidates the anchored GAAP bridge?
Monitoring Checklist
0/6 checked
Post-Event Results
correct5/5
Trade Actions0
Actual Outcomes
- • Revenue $29,591M (+86% YoY), clearing the $29.4B guide by 0.65%, the narrowest clearance in eight quarters.
- • AI semiconductor revenue $16.7B (+221% YoY, +54% QoQ), clearing its $16.0B guide by 4.38%, the widest AI beat in the eight-quarter record. XPU shipments up over 3.5x YoY and 73% of AI revenue.
- • Non-GAAP diluted EPS $3.32 against $3.24 consensus; non-GAAP gross margin 74.99% against a 74.0% guide; non-GAAP operating margin 67.91%, up 240bps YoY.
- • GAAP diluted EPS $2.68 on a 14.32% effective tax rate, up from 8.10% in Q2 and not guided.
- • Q4 FY2026 guidance: revenue approximately $34.8B, non-GAAP operating margin approximately 66% of revenue, AI semiconductor revenue approximately $21.7B, consolidated gross margin approximately 73% against 78% a year earlier on rising XPU memory content.
- • FY2026 AI revenue raised to $58B from $56B. FY2027 AI revenue put at approximately $115B with supply described as secured and demand as exceeding it, replacing the standing >$100B wording. FY2028 line of sight approximately $230B. Management said the schedule will not be updated quarterly.
- • New disclosure: a long-term Google agreement to develop and supply future generations of TPUs and AI networking, under which Broadcom plans to deliver multi-tens of billions of dollars of TPUs annually. Anthropic stated to become the largest XPU customer in 2027 and to hold that in 2028. TPU v8i shipping ahead of MediaTek's V8T despite the latter being initiated earlier.
- • The AI XPV platform was described as a June partnership with Apollo and Blackstone targeting more than 20GW for OpenAI and Anthropic by end 2028, first $35B tranche closed. Asked to size the backstop exposure, management said it had nothing new to announce.