TLDR
- Broadcom’s AI semiconductor revenue hit $16.7 billion in Q3 2026, up 221% year over year.
- AVGO has pulled back around 26% from its June record high of $480.77.
- CEO Hock Tan expects AI revenue to reach $115 billion in 2027 and $230 billion in 2028.
- Broadcom partnered with Apollo and Blackstone on a $35 billion infrastructure financing vehicle covering 20+ gigawatts of compute capacity.
- Wall Street holds a Strong Buy consensus on AVGO with an average price target of $521.41, implying around 41% upside.
Broadcom’s stock currently sits around $367, down roughly 26% from its June closing high of $480.77. That pullback has come even as the company posted one of its strongest quarters on record.
Q3 2026 total revenue came in at $29.6 billion, up 86% year over year. AI semiconductor revenue surged 221% to $16.7 billion. Custom accelerators made up around 73% of that figure.
Semiconductor Solutions revenue jumped 127% to $20.84 billion, accounting for 70% of total sales. Infrastructure Software revenue rose 29% to $8.75 billion, driven by VMware private-cloud adoption.
Adjusted EPS nearly doubled to $3.32. Free cash flow reached $13.7 billion, equal to 46% of revenue.
AI Revenue Pipeline Keeps Growing
For Q4, Broadcom guided total revenue to $34.8 billion, up 93%. AI semiconductor revenue is expected to hit $21.7 billion, up 236%. Management now forecasts roughly $58 billion in AI semiconductor revenue for the full fiscal year.
CEO Hock Tan, speaking at the Goldman Sachs Communacopia and Technology Conference, said AI revenue could reach $115 billion in 2027 and double again to $230 billion in 2028. He added that those numbers are more constrained by infrastructure availability than by customer demand.
Power availability is now a key bottleneck. Tan pointed to electricity access, transformer availability, permitting, and construction timelines as the main factors limiting how fast AI data centers can come online.
Broadcom works with six frontier-model developers on custom XPU chips. Customers include Google, OpenAI, and Anthropic. Broadcom has a long-term agreement to supply Google with TPUs and networking products through 2031. It also agreed to supply OpenAI with 10 gigawatts of custom silicon capacity, delivering the Jalapeño ASIC sample within nine months.
AI chip bookings exceeded $30 billion last quarter. Committed deployments include more than 10 gigawatts at Anthropic, five gigawatts at OpenAI, and three gigawatts at Meta.
Valuation and Analyst Views
The stock trades at around 31.7x fiscal 2026 consensus EPS of $11.64. If consensus EPS hits $19.39 in fiscal 2027, as expected, the forward multiple drops to roughly 19x at today’s price.
Broadcom expects free cash flow in the mid-$40 billion range in 2027. CEO Tan said the board could review higher dividends or buybacks in December.
On the technical side, AVGO is trading just below its 200-day moving average of $369.97. The RSI sits at 46.14, pointing to neutral-to-slightly bearish momentum. Key support is around $358.
Citigroup maintained a Buy rating and raised its price target to $515 on September 4. Macquarie upgraded AVGO to Outperform with a $490 target on September 3. DA Davidson held a Neutral rating with a $350 target.
Wall Street’s overall consensus is a Strong Buy, based on 26 Buy ratings and three Hold ratings. The average price target stands at $521.41.
In Wednesday’s premarket session, AVGO slipped 0.03% to $368.46.
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