TLDR
- Broadcom reports Q3 FY26 earnings on September 2, with Wall Street expecting EPS of $3.22, up 90.5% year-over-year
- Revenue is forecast to hit $29.24 billion, an 83.3% increase year-over-year
- Broadcom co-developed OpenAI’s new Jalapeño inference chip, which outperformed Nvidia’s Blackwell chips in tests
- Anthropic has placed $21 billion worth of TPU orders with Broadcom, with a long-term commitment agreement in place
- Wall Street holds a Strong Buy consensus on AVGO, with an average price target of $511, implying 37.5% upside
Broadcom is heading into its fiscal Q3 earnings report on September 2 with Wall Street firmly in its corner. AVGO stock was trading around $371.54 ahead of the report, up 4.49% on the day.
Analysts expect earnings per share of $3.22, a 90.5% jump year-over-year. Revenue is forecast at $29.24 billion, up 83.3%.
Susquehanna analyst Christopher Rolland reiterated a Buy rating with a $490 price target. He expects a “generally in-line-to-slightly-positive quarter,” driven by AI networking and software businesses.
Rolland flagged supply constraints on advanced process nodes as a potential limiter for near-term AI processor upside. But he remains bullish on Broadcom’s custom chip business overall.
The broader Wall Street view backs that up. AVGO carries a Strong Buy consensus from 24 Buys and three Holds. The average price target of $511 implies roughly 37.5% upside from current levels.
TPU Business Remains the Core Growth Driver
Broadcom’s biggest revenue engine is the custom AI chips it develops with Alphabet, known as Tensor Processing Units. Alphabet has raised its capex budget to between $195 billion and $205 billion, with plans to increase it further next year.
Anthropic has placed $21 billion in TPU orders with Broadcom, and the three companies have signed a long-term commitment agreement. Broadcom books the chip revenue while Alphabet collects a licensing fee.
Broadcom remains Alphabet’s primary partner for its flagship training chip, giving it a durable position in that pipeline.
Beyond TPUs, Broadcom recently co-developed OpenAI’s new Jalapeño inference chip. In early tests, the chip outperformed Nvidia’s Blackwell chips and TPUs. OpenAI plans to deploy Jalapeño in its data centers before year-end.
HBM Access and Optical Networking Add to the Case
Broadcom has secured a $200 billion deal with Samsung Electronics for high-bandwidth memory, manufacturing, and advanced packaging through 2030. It has also locked in advanced node capacity with Taiwan Semiconductor Manufacturing.
HBM access is a real competitive advantage. Nvidia has tied up much of SK Hynix’s capacity, AMD has secured Samsung supply, and Micron’s HBM output is roughly a third of its Korean rivals. Room for new entrants is limited.
Broadcom is also a key player in optical networking, which is growing fast inside AI data centers. It leads in optical DSPs and co-packaged optics, integrating optical receivers directly into its custom chips.
With a forward P/E of around 18 based on fiscal 2027 estimates, the stock looks reasonably valued given the growth on the table.
Public companies and individual investors own 33.13% of AVGO. Vanguard holds the largest institutional stake at 8.71%.
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