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AVGO Q3 Earnings Call Puts AI Supply and Scale in Focus
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Key Takeaways
Broadcom sees fiscal 2027 AI semiconductor revenues near $115B, supported by secured supply.
Customer demand exceeds AVGO's 2027 outlook, but supply and data center readiness will shape deployments.
Broadcom expects AI networking revenues to grow as fast as XPUs over the next few years.
Broadcom Inc. (AVGO - Free Report) used its fiscal third-quarter 2026 earnings call to extend the AI story through fiscal 2028, while stressing that supply and data center readiness will determine the pace of deployment.
Third-quarter revenues of $29.59 billion and non-GAAP EPS of $3.32 topped the Zacks Consensus Estimate of $29.47 billion and $3.22, respectively. Management focused more on the execution and durability of AI demand than on the quarterly beat.
President and CEO Hock Tan expects fiscal fourth-quarter AI semiconductor revenues of $21.7 billion, up 236% year over year, and consolidated revenues of $34.8 billion, up 93%. Fiscal 2026 AI revenues are now expected at $58 billion, above the prior $56 billion guidance.
For fiscal 2027, Tan said Broadcom has secured supply to support about $115 billion of AI semiconductor revenues. Customer demand exceeds that outlook, and management plans to work on expanding supply.
Broadcom also outlined about $230 billion of AI semiconductor revenues for fiscal 2028. Tan framed the figures as a growth trajectory and tied realization to actual data center deployment readiness.
Broadcom Details the XPU Customer Ramp-Up
CEO Tan said the Google relationship now includes a long-term agreement covering future TPU generations and AI networking, with multi-tens of billions of dollars of TPUs planned annually over the next several years.
Anthropic is expected to deploy another 5 gigawatts of TPU version 8i in 2027 after 1 gigawatt of Ironwood in 2026, followed by an incremental 10 gigawatts in 2028.
OpenAI is on track for 1.3 gigawatts of Jalapeno in 2027 and more than 5 gigawatts in 2028. Meta remains on track for three MTIA generations and 3 gigawatts through 2028.
AVGO Puts Supply Discipline Behind the Outlook
A Morgan Stanley analyst asked whether the fiscal 2027 AI outlook could move higher. Tan said customers want more product, but Broadcom based its outlook on secured supply and deployments it believes can be completed.
A Jefferies analyst asked about substrate capacity. Tan said Broadcom plans to begin deploying its Singapore substrate fab in fiscal 2027 to address a key supply bottleneck.
Goldman Sachs and Truist analysts focused on infrastructure constraints. Tan said land, power and shell can dictate timing, while leading-edge wafers, substrates, HBM and system memory add further supply-chain variables.
Broadcom Extends Ethernet Across AI Clusters
President of Semiconductor Solutions Charlie Kawwas said both 100-gig and 200-gig Tomahawk 6 versions are deployed across AI hyperscalers building XPUs with Broadcom, and among customers using other accelerators.
Kawwas said Tomahawk Ultra is entering scale-up applications in the current quarter and fiscal 2027. He cited deployments across XPU clusters and some GPU clusters, using Ethernet as an open interconnect.
Tan added that AI networking revenues are expected to grow as fast as XPUs over the next few years. Broadcom also taped out Tomahawk 7, its 200-terabit-per-second Ethernet switch.
AVGO Balances Margin Dilution and AI Financing
Chief financial officer Amie Thuener guided fiscal fourth-quarter consolidated gross margin to about 73% as XPUs and higher memory content increase their mix. Non-GAAP operating margin is expected near 66%.
Tan reinforced the operating-leverage focus in Q&A, noting that revenue growth is outpacing the operating spending required to support the AI ramp-up. Third-quarter non-GAAP operating margin was 67.9%.
Thuener said the XPV financing platform will be evaluated deal by deal. The first $35 billion tranche supports Anthropic's 1-gigawatt deployment, while future structures may include modest residual-value guarantees.
Broadcom Keeps Execution at the Center
Management combined aggressive AI capacity plans with explicit execution controls. Customer commitments, secured supply and data center construction schedules shape the fiscal 2027 and 2028 revenue framework.
Broadcom is also funding substrate and optical capacity while protecting operating leverage. The call centered on scaling custom compute and networking together, with supply discipline shaping how quickly demand converts to revenues.
Zacks Signals for AVGO
AVGO carries a Zacks Rank #3 (Hold), with a Growth Score of B and Value, Momentum and VGM Scores of D. Zacks' framework treats A and B Style Scores as more favorable, while a Rank #3 can still be held with the same grade hierarchy applied. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The B Growth Score is the strongest Style Score signal, while the D ratings temper the broader profile. The Zacks Rank can change as earnings-estimate revisions incorporate the just-reported results, so the current reading should be viewed as dynamic rather than permanent.
View the Zacks #1 Rank List
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AVGO Q3 Earnings Call Puts AI Supply and Scale in Focus
Key Takeaways
Broadcom Inc. (AVGO - Free Report) used its fiscal third-quarter 2026 earnings call to extend the AI story through fiscal 2028, while stressing that supply and data center readiness will determine the pace of deployment.
Third-quarter revenues of $29.59 billion and non-GAAP EPS of $3.32 topped the Zacks Consensus Estimate of $29.47 billion and $3.22, respectively. Management focused more on the execution and durability of AI demand than on the quarterly beat.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
AVGO Maps an AI Revenue Doubling Path
President and CEO Hock Tan expects fiscal fourth-quarter AI semiconductor revenues of $21.7 billion, up 236% year over year, and consolidated revenues of $34.8 billion, up 93%. Fiscal 2026 AI revenues are now expected at $58 billion, above the prior $56 billion guidance.
For fiscal 2027, Tan said Broadcom has secured supply to support about $115 billion of AI semiconductor revenues. Customer demand exceeds that outlook, and management plans to work on expanding supply.
Broadcom also outlined about $230 billion of AI semiconductor revenues for fiscal 2028. Tan framed the figures as a growth trajectory and tied realization to actual data center deployment readiness.
Broadcom Details the XPU Customer Ramp-Up
CEO Tan said the Google relationship now includes a long-term agreement covering future TPU generations and AI networking, with multi-tens of billions of dollars of TPUs planned annually over the next several years.
Anthropic is expected to deploy another 5 gigawatts of TPU version 8i in 2027 after 1 gigawatt of Ironwood in 2026, followed by an incremental 10 gigawatts in 2028.
OpenAI is on track for 1.3 gigawatts of Jalapeno in 2027 and more than 5 gigawatts in 2028. Meta remains on track for three MTIA generations and 3 gigawatts through 2028.
AVGO Puts Supply Discipline Behind the Outlook
A Morgan Stanley analyst asked whether the fiscal 2027 AI outlook could move higher. Tan said customers want more product, but Broadcom based its outlook on secured supply and deployments it believes can be completed.
A Jefferies analyst asked about substrate capacity. Tan said Broadcom plans to begin deploying its Singapore substrate fab in fiscal 2027 to address a key supply bottleneck.
Goldman Sachs and Truist analysts focused on infrastructure constraints. Tan said land, power and shell can dictate timing, while leading-edge wafers, substrates, HBM and system memory add further supply-chain variables.
Broadcom Extends Ethernet Across AI Clusters
President of Semiconductor Solutions Charlie Kawwas said both 100-gig and 200-gig Tomahawk 6 versions are deployed across AI hyperscalers building XPUs with Broadcom, and among customers using other accelerators.
Kawwas said Tomahawk Ultra is entering scale-up applications in the current quarter and fiscal 2027. He cited deployments across XPU clusters and some GPU clusters, using Ethernet as an open interconnect.
Tan added that AI networking revenues are expected to grow as fast as XPUs over the next few years. Broadcom also taped out Tomahawk 7, its 200-terabit-per-second Ethernet switch.
AVGO Balances Margin Dilution and AI Financing
Chief financial officer Amie Thuener guided fiscal fourth-quarter consolidated gross margin to about 73% as XPUs and higher memory content increase their mix. Non-GAAP operating margin is expected near 66%.
Tan reinforced the operating-leverage focus in Q&A, noting that revenue growth is outpacing the operating spending required to support the AI ramp-up. Third-quarter non-GAAP operating margin was 67.9%.
Thuener said the XPV financing platform will be evaluated deal by deal. The first $35 billion tranche supports Anthropic's 1-gigawatt deployment, while future structures may include modest residual-value guarantees.
Broadcom Keeps Execution at the Center
Management combined aggressive AI capacity plans with explicit execution controls. Customer commitments, secured supply and data center construction schedules shape the fiscal 2027 and 2028 revenue framework.
Broadcom is also funding substrate and optical capacity while protecting operating leverage. The call centered on scaling custom compute and networking together, with supply discipline shaping how quickly demand converts to revenues.
Zacks Signals for AVGO
AVGO carries a Zacks Rank #3 (Hold), with a Growth Score of B and Value, Momentum and VGM Scores of D. Zacks' framework treats A and B Style Scores as more favorable, while a Rank #3 can still be held with the same grade hierarchy applied. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The B Growth Score is the strongest Style Score signal, while the D ratings temper the broader profile. The Zacks Rank can change as earnings-estimate revisions incorporate the just-reported results, so the current reading should be viewed as dynamic rather than permanent.