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AVGO · US

AVGO.US: Q3'26 — AI semis $16.7B, FY27 $115B target

Broadcom FY Q3 (to 2026-08-02) revenue $29.6B (+86%), AI semis $16.7B (+221%), delivering the Q3 step-up. Q4 guide ~$34.8B / AI ~$21.7B; FY26 AI raised to $58B, FY27/28 ~$115B/~$230B. Print beat, tape cool. See NVDA.

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Snapshot

Price (2026-09-03)
USD 357.16
Mkt cap (approx.)
USD 1702.0B
TTM revenue
USD 89.1B
Q3 AI semis
USD 16.7B
As of 2026-09-25

As-of 2026-09-25 (weekly refresh; equities aligned to §A. Missing series are N/A/null. Not investment advice.)

Thesis

Broadcom FY Q3 (ended 2026-08-02) delivered the step-up it guided last quarter: revenue $29.591B (+86% YoY / +33% QoQ), a slight beat vs the ~$29.4B company guide and ~$29.3B Street; AI semiconductors $16.7B (+221% YoY / +54% QoQ) vs the ~$16B guide. Non-GAAP EPS $3.32 (+96%), GAAP diluted EPS $2.68 (+215%); FCF $13.7B (46% of sales).

The tape was cooler: $367.24 on 9/2, $357.16 on 9/3 (~−2.7%). The market is not debating whether AI demand exists; it is pricing Q4 revenue guide ~$34.8B a hair below ~$35.0B Street, Non-GAAP GM at 75% (−210 bps QoQ on XPU/HBM mix), and $115B/$230B long-dated targets that explicitly cap on supply plus customer concentration.

Versus NVDA, AVGO is the custom-XPU + AI Ethernet complement, not a GPU substitute. Near-term anchor: Q4 AI semis ~$21.7B and FY26 AI $58B (raised from $56B). Medium-term: management’s FY27 ~$115B / FY28 ~$230B AI outlook, framed as secured supply — and they said they will not refresh that long-term figure every quarter.

Business

Model: semiconductor solutions (custom ASIC/XPU + Ethernet switching) plus infrastructure software (VMware subscriptions). Q3 mix: semis 70% ($20.839B, +127%), software 30% ($8.752B, +29%).

Flagships:

  1. Custom AI accelerators (XPUs) — co-designed with Google TPU, Anthropic, OpenAI, Meta and others; the core of Q3’s $16.7B AI semi print.
  2. AI networking silicon — Tomahawk/Jericho Ethernet; management expects both XPUs and AI networking to roughly triple YoY in Q4.
  3. VMware Cloud Foundation — subscription private cloud / AI private cloud; software operating margin ~84% is the profit and cash ballast.

Edge: multi-year hyperscaler co-design plus attaching Ethernet to the same XPU wallet.
Strategy (12–24m): FY26 AI $58B → FY27 ~$115B → FY28 ~$230B as a supply-locked path; Singapore substrate capacity to ease a bottleneck.
Entity: Broadcom Inc. (Nasdaq: AVGO), Palo Alto; VMware is fully consolidated.

Strategy pillars

Strategy pillars
PillarWhatImplication
Custom ASIC (XPU)Google TPU, Anthropic, OpenAI, Meta + two more; six XPU customersCore AI growth engine; extreme concentration
AI networkingTomahawk / Jericho Ethernet; rack-scale attach to XPUsCompetes with NVDA Spectrum / ANET fabrics
VMware softwareSubscription VCF / AI private cloudCash and margin ballast; growth << semis
Supply lockLeading-edge wafers, substrates, HBM; Singapore substrate fabFY27 $115B / FY28 $230B framed as supply-capped
ManufacturingTSMC leading-edge / CoWoS outsourcedAllocation and geopolitics risk
As of 2026-09-25

Value chain

Position: mid-stack AI cluster silicon (custom design + switching); manufacturing is outsourced.
Upstream: TSMC leading-edge / CoWoS, substrates, HBM. Management says the binding constraints are silicon, substrates and memory — not vanished orders.
Downstream: six XPU customers (including Google, Anthropic, OpenAI, Meta); software sells into enterprise IT / private cloud.
Concentration: AI semis are a single-digit customer franchise (CEO: “glad we have only six”). That is both the moat and the core operating risk.
Supply risks: (1) substrate / CoWoS / HBM allocation; (2) power and data-center readiness delaying deployments. Both echo in #risks.

Valuation

Price $357.16 (2026-09-03, Yahoo), market cap about $1.70T (~4.77B basic shares). TTM GAAP NI ~$38.3B → PE ~46x; book equity $99.7B → PB ~17x; $0.65 quarterly dividend → yield ~0.73%. The 52-week high is $495, so the stock has already retraced, but the absolute multiple is still rich: the market is paying for a multi-year custom-AI plus networking supply curve, with limited tolerance for guide slope or mix-driven GM.

Valuation snapshot (multi-lens)

Valuation snapshot (multi-lens)
MetricValueNote
P/E (TTM GAAP)~46xPrice $357.16 / TTM GAAP NI ~$38.3B
P/E (TTM Non-GAAP, approx.)~35xTTM Non-GAAP NI ~$48.3B (Q4'25–Q3'26)
P/B~17xEquity $99.7B at 2026-08-02
Earnings yield (GAAP)~2.2%1/PE approx.
Dividend yield~0.73%$0.65 quarterly / $357.16
Spot read$357.16Yahoo close 2026-09-03; 52w high $495
As of 2026-09-25

~3y valuation/return series (TTM GAAP PE; PE null where TTM is too distorted to reconstruct cleanly; PB only where a balance-sheet equity print exists):

Valuation & return · ~3y

Interactive chart available in the reader.

Price: Yahoo Finance AVGO 3-month bar closes (split-adjusted). PE = close / (sum of last four fiscal-quarter GAAP NI / diluted shares); PE is null through the VMware-distorted TTM. PB only at FY2025 year-end and Q3 FY26, where equity is printed. Div yield = then-annualized quarterly dividend / close. ann_return = price change vs the close four bars earlier (not total return). · As of 2026-09-25

~3y price (Yahoo 3-month bar closes, split-adjusted):

Share price · ~3y

Interactive chart available in the reader.

Yahoo Finance AVGO 3-month interval closes (split-adjusted); 2026-Q3 uses the 2026-09-03 close of $357.16. YoY vs the close four bars earlier. · As of 2026-09-25

Financial trend (~24 months)

Last 8 fiscal quarters (2024-Q4…2026-Q3 are Broadcom fiscal labels; Q1 is ~Nov–Jan, not calendar quarters). Revenue and GAAP NI from 8-Ks. Margin chart uses GAAP GM to match the income statement; the call’s Non-GAAP GM is 75% (−210 bps QoQ).

Revenue · last 8 fiscal quarters

Interactive chart available in the reader.

Broadcom 8-K / earnings releases (fiscal labels; Q3 FY26 ended 2026-08-02 is $29.591B). YoY from company prints or the comparative columns. · As of 2026-09-25

GAAP gross margin · last 8 fiscal quarters

Interactive chart available in the reader.

GAAP GM from each 8-K income statement. Q3 FY26 Non-GAAP GM is 75% (−210 bps QoQ); the chart uses GAAP to match NI. Null where YoY/QoQ cannot be computed from the same filings. · As of 2026-09-25

GAAP net income · last 8 fiscal quarters

Interactive chart available in the reader.

GAAP NI from 8-Ks. Q3 FY24 was a loss, so some YoY prints are null (negative or incomplete base). Q4 FY24 QoQ is also null (loss to profit). · As of 2026-09-25

Financial health (§A.7)

Q3 OCF $14.2B, capex $0.5B, FCF $13.7B. Cash $24.0B; ST debt $2.3B + LT debt $57.2B ≈ $59.4B interest-bearing, net debt ~$35.4B. Current assets $52.2B / current liabilities $20.8B → current ratio ~2.5x. $5.6B of debt repaid in-quarter (plus $1.5B after quarter-end). FY2025 10-K: unqualified opinion; this quarter is unaudited.

Financial health (OCF / debt / liquidity / audit)

Financial health (OCF / debt / liquidity / audit)
ItemValueNote
OverallStrong cash conversion; net debt fallingAI mix expanding but FCF 46% of sales
Operating cash flow (Q3)$14.2B+98% YoY; capex $0.5B
Free cash flow (Q3)$13.7B46% of revenue; +95% YoY
Interest-bearing debt vs cash$59.4B vs $24.0B cashNet debt ~$35.4B; $5.6B repaid in Q3
LiquidityCurrent ratio ~2.5xCA $52.2B / CL $20.8B
Audit / going concernUnqualified (FY2025 10-K)Q3 FY26 unaudited; no going-concern emphasis
As of 2026-09-25

Operations

Q3: semis $20.839B (+127%), of which AI $16.7B and non-AI semis ~$4.2B (+5% YoY, flat QoQ); software $8.752B (+29%). Non-GAAP operating income $20.1B, operating margin a record ~67.9%. Both total revenue and AI beat the June Q3 guide.

Q3 FY26 key points

Q3 FY26 key points
ItemValueYoYNote
Q3 revenue$29.591B+86%FY Q3 ended 2026-08-02; vs ~$29.4B guide
AI semiconductors$16.7B+221%+54% QoQ; vs ~$16B guide
Semiconductor solutions$20.839B+127%70% of sales; non-AI ~$4.2B
Infrastructure software$8.752B+29%VMware; ~84% op. margin
Non-GAAP EPS / GAAP EPS$3.32 / $2.68+96% / +215%Non-GAAP NI $16.4B
Non-GAAP GM / op. margin75% / 67.9%GM −210bps QoQXPU/HBM mix; OP record
FCF$13.7B+95%46% of revenue; OCF $14.2B
As of 2026-09-25

Q4 FY26 guide

Q4 revenue guide
USD 34.8B
Q4 revenue YoY
1
Q4 AI semis
USD 21.7B
FY27 AI target
~$115B
As of 2026-09-25

Q4 FY26 guide and medium-term targets

Q4 FY26 guide and medium-term targets
ItemGuideRead
Q4 revenue~$34.8B+93% YoY; a hair below ~$35.0B Street
Q4 semiconductors~$26.1B+136% YoY (call)
Q4 AI semiconductors~$21.7B+236% YoY; next print to watch
Q4 infrastructure software~$8.7B+25% YoY
Q4 Non-GAAP op. margin~66%Flat YoY; Q3 print was 67.9%
FY26 AI revenue$58BRaised from $56B; +186% YoY
FY27 / FY28 AI~$115B / ~$230BSecured-supply outlook; not a quarterly refresh
As of 2026-09-25

Q4 guide: revenue ~$34.8B (+93%), semis ~$26.1B, AI semis $21.7B (+236%), software ~$8.7B (+25%); Non-GAAP operating margin ~66% (flat YoY). FY26 AI outlook raised to $58B (+186%).

Competition

Peers: NVIDIA (merchant GPU), AMD (MI accelerators), Arista (AI Ethernet), Marvell (custom/optics). Strengths: XPU co-design depth plus switching attach. Weaknesses: extreme customer concentration, no CUDA stack, GM dilution from HBM/XPU mix, and GPUs still dominate AI-accelerator dollars.

Two charts, two definitions: share_trend is AVGO AI semis / company revenue (disclosed mix, not TAM share). peer_share is the mix of disclosed AI/DC-related revenue in adjacent windows (NVDA Q2 FY27 DC $85.6B + AVGO Q3 AI $16.7B + AMD Q2 DC $6.72B) — a scale check, not a third-party census.

AI semis as % of company revenue · last 8 fiscal quarters

Interactive chart available in the reader.

Company-disclosed AI semiconductor revenue / consolidated revenue (Q3 FY26: $16.7B / $29.591B). This is product mix, not TAM share. yoy_pp = this year's mix minus last year's mix. · As of 2026-09-25

Disclosed AI/DC-related revenue mix (adjacent windows)

Interactive chart available in the reader.

NVDA Q2 FY27 Data Center $85.6B + AVGO Q3 FY26 AI semis $16.7B + AMD Q2 2026 Data Center $6.72B. Scale check only — not a third-party census; fiscal periods do not fully overlap. · As of 2026-09-25

Peer comparison

Peer comparison
CompanyPositionMarginStrengthWeakness
BroadcomCustom XPU + AI EthernetNon-GAAP GM 75%Hyperscaler co-design; switching attach~6 XPU customers; mix-diluted GM
NVIDIAMerchant GPU platformGAAP GM ~75%CUDA + systems stackLess captive ASIC; export controls
AMDMI accelerators / HeliosNon-GAAP GM ~56%Second-source GPU narrativeScale vs NVDA/AVGO AI
AristaAI Ethernet systemsGM ~64%EOS softwareNo XPU franchise
MarvellCustom / optics / DSP~60% rangeCustom silicon + opticsScale vs AVGO
As of 2026-09-25

Management

Core management (24m)

Core management (24m)
RoleNameSince24m change
CEO / PresidentHock Tan2006No change
CFOAmie Thuener2026-06-12Succeeded Kirsten Spears (retired); ex-Alphabet CAO
ChairHenry Samueli2018No change
As of 2026-09-25

Stability: Hock Tan has been CEO since 2006. CFO changed: Kirsten Spears retired 2026-06-12; Amie Thuener (former Alphabet CAO) succeeded her (announced 2026-04-02; Spears stays as advisor for nine months). Q3 is one of Thuener’s first prints — a planned handoff, not a shock.

Outlook

Near term: Q4 ~$34.8B / AI ~$21.7B / 66% Non-GAAP operating margin, and whether mix pushes GM another step down. Medium term: the FY26 AI $58B path and whether FY27 $115B stays a supply cap rather than a demand cut. Software: VMware subscriptions and AI private cloud holding ~25% growth.

Scenarios

Scenario Condition Implication
Bull Q4 AI ≥$21.7B and GM stabilizes; FY27 $115B backed by both orders and supply Multiple can digest growth; catch-up rally
Base Guide delivered; Non-GAAP GM oscillates 73–75%; high-beta hold Own the execution, do not underwrite quarterly beats
Bear Hyperscaler capex/power slips, substrate bottleneck, Q4 or FY27 cut Growth and multiple compress together

Risks

Risk Severity Note
Customer concentration (~6 XPU names) High One hyperscaler slip moves the guide
Rich multiple vs guide slope High Q3 beat still sold off on a slightly light Q4 guide
Supply (substrates / CoWoS / HBM / power) High $115B/$230B is explicitly supply-capped
XPU mix dilutes GM Medium Non-GAAP GM 75%, −210 bps QoQ
GPU platforms and second-source ASICs Medium vs NVDA CUDA; customers can dual-source
Export controls / geopolitics Medium Advanced packaging and China policy
VMware growth deceleration Low Still the profit ballast; growth << semis
CFO transition Low Planned retirement + 9-month advisor period

Tracking list

  1. Q4 AI semis vs ~$21.7B (XPU vs networking split)
  2. Non-GAAP GM / operating margin vs guide (~73% GM, ~66% OP)
  3. FY26 AI $58B and FY27 $115B — any supply or customer-timing cut
  4. Whether the six XPU customers expand or add a second source (Google TPU / Anthropic / OpenAI)
  5. VMware software still ~+25% with high-80s margins
  6. Net-debt paydown and FCF conversion (Q3 FCF 46% of sales)

References

  1. Broadcom Q3 FY2026 release (ended 2026-08-02, issued 2026-09-02): https://www.prnewswire.com/news-releases/broadcom-inc-announces-third-quarter-fiscal-year-2026-financial-results-and-quarterly-dividend-302868129.html
  2. Broadcom IR: https://investors.broadcom.com/
  3. Q2 FY2026 release (Q3 guide $29.4B / AI ~$16B): https://investors.broadcom.com/news-releases/news-release-details/broadcom-inc-announces-second-quarter-fiscal-year-2026-financial
  4. Q1 FY2026 8-K (AI $8.4B): https://investors.broadcom.com/static-files/67eebac0-2b23-4009-bc75-0eec53840922
  5. Q4 FY2025 8-K (revenue $18.015B, AI $6.5B, GAAP NI $8.518B): https://www.sec.gov/Archives/edgar/data/1730168/000173016825000116/avgo-11022025x8kxex99.htm
  6. Q3 FY2025 8-K: https://investors.broadcom.com/static-files/9836683a-9b92-4bec-9035-27942f21d42e
  7. CFO transition (2026-04-02; Thuener effective 2026-06-12): https://investors.broadcom.com/news-releases/news-release-details/broadcom-announces-planned-chief-financial-officer-transition
  8. Call takeaways (AI $16.7B, Q4 AI $21.7B, FY26 $58B / FY27 $115B / FY28 $230B): https://www.investing.com/news/transcripts/earnings-call-transcript-broadcom-tops-q3-2026-estimates-as-ai-sales-surge-93CH-4886849
  9. Price: Yahoo Finance AVGO, 2026-09-03 close $357.16
  10. See also: NVDA, AMD, ANET, TSMC, CRDO

Not investment advice; defer to latest SEC/IR disclosures. Long-term AI figures are management outlooks and are explicitly supply-constrained.

Disclaimer: For research information only. Not investment advice or a recommendation to buy or sell.

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