Broadcom (NASDAQ: AVGO) Posts Record Q3 Revenue of $29.6B as AI Chip Sales Triple

Broadcom Inc. (NASDAQ: AVGO) reported fiscal third-quarter results for the period ended August 2, 2026, posting record revenue of $29.6 billion, up 85.5% year over year, with adjusted EPS of $3.32 beating the $3.30 consensus estimate by 0.6%. GAAP EPS came in at $2.68, compared to $0.85 in the year-ago period, a 215.3% increase.

Q3 FY2026 Results

• Revenue: $29.6 billion, up 85.5% year over year, driven by the semiconductor solutions segment rising 127% to $20.8 billion and infrastructure software growing 29% to $8.8 billion.
• Adjusted EPS: $3.32 vs. the $3.30 consensus estimate; GAAP EPS of $2.68 vs. $0.85 in Q3 2025.
• Non-GAAP operating income: $20.1 billion, up 92.2% year over year, with non-GAAP operating margin expanding 2.4 percentage points to 67.9%.
• AI semiconductor revenue: $16.7 billion in Q3, up 221% year over year and 54% sequentially.
• Free cash flow: $13.7 billion, representing 46% of revenue, on operating cash flow of $14.2 billion and capital expenditures of $532 million.

What Drove the Results

Adjusted EPS of $3.32 beat the $3.30 consensus by $0.02. Revenue of $29.6 billion grew 85.5% year over year, with the semiconductor solutions segment more than doubling as custom AI accelerator demand accelerated sharply. Non-GAAP operating margin reached 67.9%, expanding 2.4 percentage points from 65.5% in the year-ago quarter, as revenue growth outpaced cost increases.

GAAP net income of $13.1 billion diverged from non-GAAP net income of $16.4 billion, a gap of approximately $3.3 billion. The primary non-cash adjustments include $2.0 billion in amortization of acquisition-related intangible assets and $2.0 billion in stock-based compensation, consistent with the company's post-VMware acquisition cost structure.

Despite the beat, Q4 FY2026 revenue guidance of approximately $34.8 billion, representing 93% year-over-year growth, came in 1.1% below analyst consensus expectations. Broadcom expects Q4 non-GAAP operating income of approximately 66% of projected revenue, implying roughly $23.0 billion. CEO Hock Tan stated that Q4 AI semiconductor revenue is expected to reach $21.7 billion, up 236% year over year.

Wall Street View

Analyst StoneX Financial's Cody Acree commented that the earnings beat was not sufficient to satisfy investor expectations, reflecting market sentiment that guidance fell short of the higher bar set by prior AI-driven momentum. Shares fell -0.66% on Wednesday, September 2, 2026, while the S&P 500 gained 0.44%. The company's board approved a quarterly cash dividend of $0.65 per share, payable September 30, 2026, to stockholders of record as of September 21, 2026.

Investor Takeaway

Broadcom's Q3 results confirm that custom AI accelerator demand remains a structural growth engine, with AI semiconductor revenue now representing 56% of total Q3 revenue and set to grow further in Q4. The more significant question for investors is whether the 1.1% guidance shortfall relative to consensus indicates a deceleration in the rate of upside surprises that the market has come to price in, particularly given the stock's forward valuation. Free cash flow conversion of 46% of revenue underscores the financial durability of the business even as investors weigh whether future quarters can continue to exceed an increasingly elevated expectations bar.