Broadcom (AVGO) Stock Falls After Q4 Guidance Misses Despite 221% AI Chip Sales Surge

TLDR

• Broadcom Q3 revenue rose 86% to $29.59 billion, beating Wall Street estimates of $29.43 billion
• AI chip revenue surged 221% to $16.7 billion, with Q4 expected to hit $21.7 billion (236% growth)
• Broadcom raised its FY2027 AI chip outlook to $115 billion and doubled down on $230 billion for FY2028
• Q4 revenue guidance of $34.8 billion came in slightly below the $35 billion analyst estimate, sending the stock lower
• AVGO fell around 2.2% in premarket Thursday; analysts maintain a Strong Buy with an average price target of $505.38

Broadcom (AVGO) posted strong fiscal third-quarter results on Wednesday, but the stock slipped anyway. AVGO was down about 2.2% in premarket trading Thursday, after swinging in both directions during after-hours Wednesday.

Broadcom Inc., AVGO

The headline numbers were solid. Q3 revenue came in at $29.59 billion, up 86% year-over-year and above the Wall Street estimate of $29.43 billion. Adjusted EPS of $3.32 beat expectations of $3.22 to $3.24, and nearly doubled from $1.69 a year ago.

BROADCOM $AVGO Q3’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $29.6B (Est. $29.36B) 🟢; +86% YoY
🔹 Adj. EPS: $3.32 (Est. $3.24) 🟢; +96% YoY
🔹 AI Semiconductor Revenue: $16.7B; +221% YoY
🔹 Non-GAAP Oper Income: $20.1B (Est. $19.73B) 🟢; +92% YoY

Q4 Guide:
🔹 Revenue: ~$34.8B (Est.… pic.twitter.com/diJXwYmaNs

— Wall St Engine (@wallstengine) September 2, 2026

AI chip revenue was the standout. It jumped 221% year-over-year to $16.7 billion, topping both the company’s own guidance and the Street consensus. Broadcom expects that figure to climb to $21.7 billion in Q4, representing 236% growth.

Long-Term AI Outlook Gets a Lift

Broadcom also raised its longer-term numbers. The company now targets $115 billion in AI chip revenue for fiscal 2027, up from a prior forecast of over $100 billion. It then expects that to roughly double to around $230 billion in fiscal 2028.

CEO Hock Tan said demand is currently outpacing the company’s supply chain capacity, which gives some weight to those forecasts.

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Last quarter, Broadcom held its FY2027 AI guidance at $100 billion and the stock fell hard. This time around, the raised outlook did not stop the selling.

What Dragged the Stock Lower

The issue was Q4 guidance. Revenue is expected at $34.8 billion, up 93% year-over-year, but just short of the roughly $35 billion analysts had penciled in. Adjusted operating margin guidance also missed slightly, coming in at 66% versus the expected 66.5%.

That small gap was enough to overshadow the strong AI numbers.

The stock is also carrying baggage from recent months. AVGO has dropped around 26% from its all-time high in June. A quarterly filing revealed Broadcom could face up to $29 billion in lease obligations tied to a data center fund launched by Apollo and Blackstone, which raised some eyebrows around the demand story.

Then in August, Google signed a deal with Marvell to design chips for parts of its AI infrastructure. Broadcom extended its TPU deal with Google in April, but Marvell will now handle other chip work, trimming a potential source of future revenue for Broadcom.

Broadcom designs custom AI accelerators for Google Cloud, Meta Platforms, and OpenAI. Google remains its largest and oldest customer.

Year-to-date, AVGO is up 6.5%. Mizuho analyst Vijay Rakesh kept his Buy rating and $530 price target after the results, projecting AI revenue of $129 billion in FY2027 and $235 billion in FY2028. The average analyst price target on TipRanks sits at $505.38, implying 37.6% upside.

The consensus rating is Strong Buy, based on 23 Buy ratings and three Holds.

Broadcom’s current forward P/E of 18.8x sits just above the S&P 500, a far cry from the premium valuation it carried earlier this year.