Broadcom’s Q3 Beats the Street — But Only Just Barely
Broadcom just posted its ninth straight quarterly beat and watched its stock sink anyway. The AI revenue numbers are staggering, but the real story is what management said about 2027 and 2028 that has analysts scrambling to revise their models.
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Broadcom (NASDAQ:AVGO | AVGO Price Prediction) posted its Q3 FY2026 report after the close on September 2, 2026, and beat on both the top and bottom line. The problem: it was barely a beat. Revenue edged consensus by just 0.53% and EPS by 2.53%, thin margins against the expectations baked into the AI trade. Shares sank in extended trading despite the ninth straight quarterly beat. AVGO stock is down 4.4% in noon trading.
AI Revenue Does the Heavy Lifting
The AI story remains the reason to own Broadcom, and it stayed loud. AI semiconductor revenue hit $16.70 billion, up 221% year over year and 54% sequentially. Semiconductor Solutions overall came in at $20.84 billion, up 127% YoY, and now drives 70% of the top line.
Cash generation was the quiet win. Free cash flow of $13.66 billion equaled 46% of revenue, and operating margin expanded 240 basis points to 67.9%. I liked the operating leverage here. Revenue is outrunning opex, and the flow-through is showing.
Only Nit: A Beat Priced In
If you want to worry, worry about setup. AVGO has now beaten 10 straight quarters, yet the average one-day reaction after a beat is -1.91%. Last quarter, a similar narrow beat was followed by a -12.59% day-of drop. Expectations are the real risk here.
Guidance Steals the Show
Key Figures (Q3 FY26)
- Non-GAAP EPS: $3.32 (vs. $3.24 expected)
- Revenue: $29.59B (vs. $29.44B expected); up 85.5% YoY
- Operating income: $15.96B; up 171% YoY
- Net income: $13.09B; up 216% YoY
- Free cash flow: $13.66B (46% of revenue)
- Q4 revenue guide: ~$34.80B, up 93% YoY
- Q4 AI semi guide: $21.70B, up 236% YoY
You should focus on that Q4 AI guide. It is the actual fuel here, well ahead of the run-rate implied by consensus.
Hock Tan Turns Up the Volume
CEO Hock Tan struck a confident tone. He said “Q3 demand was simply hot and we’re just getting started,” and management flagged secured supply to support roughly $115 billion of AI revenue in fiscal 2027 and $230 billion in fiscal 2028. Broadcom also said it remains on target to exceed $30 in EPS in fiscal 2028. That is the anchor for the bullish 2028 outlook analysts are latching onto.
Watch the Setup Into Q4
Broadcom reports Q4 FY2026 results on December 9, 2026. I would keep an eye on XPU shipments, whether AI networking triples as guided, and any color on supply constraints around HBM, substrates, and data-center power. All of that buildout has to be powered, cooled, and networked by somebody, and we pulled seven of those suppliers into a free AI infrastructure report. The bar just moved higher.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
