Broadcom Q3 Earnings: $29.4B Revenue Expected Amid AI Growth

Broadcom faces increasingly bullish analyst sentiment with J.P. Morgan's Harlan Sur reiterating a Buy rating and raising his price target to $600, up from his previous $500 target. According to TipRanks.com, Sur is ranked as a top 25 analyst with an average return of 42.20% per rating. The analyst consensus now shows a Strong Buy rating with an average price target of $509.11, representing a 36.3% upside from current levels. BMO Capital also initiated coverage with a Buy rating and $455 price target, while the stock maintains 25 buy ratings, three holds, and no sells on Benzinga Pro. The company remains 23% below its record high set on June 2, though it has gained 6.1% year-to-date in 2026 and 23.7% over the last month. Barclays' analyst Blayne Curtis has an overweight rating and $540 price target, citing Broadcom's 50% exposure to the Enterprise end market which should continue improving into next year.

Analysts expect $29.24 billion in revenue and $3.22 in adjusted earnings per share for the quarter, representing significant growth from $15.95 billion revenue and $1.69 EPS in last year's third quarter, as reported by Benzinga Pro. The company has beat revenue estimates in eight of the last 10 quarters and earnings estimates for six straight quarters. According to Zacks Investment Research, the Zacks Consensus Estimate for revenues is pegged at $29.47 billion, suggesting 84.74% growth from the year-ago quarter, while the consensus mark for earnings has remained unchanged at $3.22 per share over the past 30 days, indicating 90.53% growth from the previous year. The company's growth is increasingly dependent on AI chips, which account for $16 billion of this quarter's sales, representing 54% of total revenue, up from 49% last quarter. This includes OpenAI's first custom processor, though Broadcom maintains its 67 cents profit margin per dollar of sales while revenue jumps 84%. Barclays notes that Broadcom delivered record revenues in Q3 with good growth in cloud, 5G infrastructure, broadband, and wireless, with the management expecting this trend to continue in the next quarter.

Broadcom's earnings report comes after a strong double beat and impressive guidance from peer Nvidia Corporation, creating additional pressure on the company to demonstrate AI growth momentum. Freedom Capital Markets Chief Market Strategist Jay Woods notes that Broadcom tends to follow Nvidia's performance, stating that "after Nvidia forecast roughly 70% revenue growth next fiscal year it puts added pressure on Broadcom. Nvidia proved the AI party isn't over. Now Broadcom has to prove it's getting a bigger invitation." The company's AI semiconductor revenues are expected to accelerate to approximately $16 billion in Q3, representing growth of more than 200% year over year, with demand for custom XPUs and AI networking products remaining exceptionally strong. AI semiconductor bookings exceeded $30 billion in Q2 compared with $10.8 billion of shipments, and the company expects AI semiconductor revenues to double in the second half of 2026 compared with the first half, reflecting robust customer commitments and strong multi-gigawatt partnerships with leading AI developers including Google, Anthropic, OpenAI and Meta. Barclays analyst Blayne Curtis highlights that Broadcom guided Wireless up 33% QoQ and sees potential upside into January given likely content gains at Apple with WiFi 6E, touch, wireless charging, and DCM, with another potential step up in 2023 with the Apple modem.

Broadcom's non-AI semiconductor business is expected to contribute significantly to Q3 growth as cyclical conditions improve. Non-AI semiconductor revenues were $4.2 billion in Q2, up 6% year over year, while bookings exceeded $6 billion, indicating strengthening demand across broadband, server storage, and enterprise networking segments despite seasonal wireless weakness. According to Zacks Investment Research, non-AI semiconductor revenues are forecasted to be approximately $4.5 billion, up 12% year over year for Q3. However, Broadcom's third-quarter fiscal 2026 results are expected to face gross-margin pressure from a heavier mix of lower-margin AI semiconductors, particularly TPUs. The company expects consolidated gross margin to decline to about 74%, despite strong operating leverage, as the shift toward higher-volume, lower-margin AI products impacts overall profitability metrics. Barclays notes that the company's revenue growth has been strong due to growth in data center revenues (40% of Q2 FY22 revenues), with the inclusion of Inphi providing an earnings bump, and the management believes the data center will further drive Q3 growth along with 5G business.

Broadcom shares have traded within a descending channel since June 3, with buying volume only improving on August 27, as reported by TipRanks. The stock needs a daily close above $376.28 to confirm a breakout, followed by a move above $398.34 to leave the channel. Failure to hold these levels could trigger a decline to $356.62, opening further downside to $344.46, with a break below $334.62 exposing $324.79. The company's historical performance shows it has beaten estimates every quarter since 2024, yet shares have fallen the following day four times with an average move of 10.53%. J.P. Morgan's Harlan Sur, who ranks No. 17 among more than 12,500 analysts on TipRanks with a 70% success rate and 42.20% average return per rating, expects the stock to benefit from solid AI-driven demand tailwinds with 38.2% upside potential. Truist analyst William Stein has a buy rating and $564 price target, emphasizing that investors should continue buying the stock for its 3% dividend yield and the double-digit dividend growth over the long term.