Broadcom's Q3 Earnings Beat Estimates but Miss Investor Expectations
Broadcom (NASDAQ:AVGO) reported better-than-expected results for its third quarter in fiscal year 2026, with revenue and earnings per share both exceeding consensus estimates. However, the narrow margins—just a 0.53% beat on revenue and a 2.53% beat on EPS—failed to excite investors, leading shares to fall by nearly 4.4% in extended trading. The company's AI semiconductor segment was a standout performer, with $16.7 billion in revenue—a 221% year-over-year increase and 54% sequential growth. CEO Hock Tan projected significant future AI-related revenue, forecasting $115 billion for fiscal 2027 and $230 billion by 2028. Despite these bullish projections, the market reacted negatively due to concerns over already high expectations. Broadcom also reported strong cash generation with free cash flow of $13.66 billion—46% of revenue—and an expanded operating margin of 67.9%. The company guided for Q4 FY2026 revenue of approximately $34.8 billion, including a projected AI semiconductor segment of $21.7 billion.
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