AVGO 2026 Q3

Q3 revenue, operating income and free cash flow all exceeded prior company records, with consolidated revenue of $29.6 billion up 86% year-over-year, driven by AI semiconductor revenue growing 221% year-over-year and 54% sequentially.

“We delivered an exceptional quarter with revenue, operating income and free cash flow all exceeding prior records.”— Hock Tan, President and CEO

Management raised its fiscal 2026 AI semiconductor revenue outlook to $58 billion, above its prior guidance of $56 billion, citing accelerating adoption by XPU customers.

“we expect our fiscal 2026 AI revenue to be $58 billion for the year, up 186% year-over-year and above our prior guidance of $56 billion”— Hock Tan, President and CEO

Management introduced new multi-year AI revenue guidance, expecting AI revenue to double again to approximately $115 billion in fiscal 2027 and double again to $230 billion in fiscal 2028, a trajectory not previously disclosed.

“In 2027, we have secured the supply to again double AI revenue to approximately $115 billion”— Hock Tan, President and CEO

Management stated it is now on target to exceed $30 in non-GAAP EPS by fiscal 2028, a specific forward earnings target tied to the newly disclosed AI revenue trajectory.

“we are very much on target to exceed $30 in earnings per share in fiscal 2028”— Hock Tan, President and CEO

Infrastructure software revenue growth is guided to stabilize at approximately $8.7 billion in Q4, essentially flat to slightly down from Q3's $8.8 billion, decelerating from the 29% year-over-year growth reported in Q3.

“we forecast infrastructure software revenue to stabilize at approximately $8.7 billion”— Hock Tan, President and CEO

AI networking revenue grew over 2.5x year-over-year in Q3, and management now expects it to grow just as fast as XPU revenue over the next several years, an upgraded growth expectation for this product line.

“our AI networking revenue is expected to grow just as fast as XPUs over the next few years”— Hock Tan, President and CEO

Management guided Q4 XPU and AI networking revenue to triple year-over-year, an acceleration versus the already strong prior growth rates.

“In Q4, we expect both XPUs and AI networking revenue to triple year-over-year”— Hock Tan, President and CEO

Management disclosed that customer demand for XPUs currently exceeds the secured $115 billion 2027 supply outlook, and the company will work to increase supply, implying potential upside to guidance.

“Our demand actually exceeds this outlook, and we will work to improve supply.”— Hock Tan, President and CEO

Anthropic is now expected to become Broadcom's largest XPU customer in 2027 and sustain that position in 2028, ramping from 1 gigawatt in 2026 to 5 gigawatts in 2027 and an incremental 10 gigawatts in 2028.

“Anthropic is on track to become our largest XPU customer in 2027 and sustain that in 2028”— Hock Tan, President and CEO

OpenAI is now expected to become Broadcom's second largest XPU customer by 2028, with deployment growing from 1.3 gigawatts in 2027 to over 5 gigawatts in 2028 including a successor XPU generation.

“which would make OpenAI our second largest XPU customer”— Hock Tan, President and CEO

Broadcom's engagement with Google has strengthened further via a new long-term agreement to supply multi-tens of billions of dollars of TPUs and AI networking annually over the next several years.

“Our engagement with Google has never been stronger.”— Hock Tan, President and CEO

Adoption of the Tomahawk Ultra scale-up Ethernet switch has exceeded management's own expectations, with deployments now beginning this quarter and continuing into fiscal 2027.

“The adoption on this device has surprised us, and we're starting to see it deployed starting this quarter and into fiscal 2027 in scale-up applications.”— Charlie Kawwas, President, Semiconductor Solutions Group

Growing enterprise consumption of AI is opening a new revenue opportunity for Broadcom's infrastructure software business, enabled by the newly launched VMware Private AI Cloud and workload repatriation from public to private cloud.

“Enterprise consumption of AI is opening a new opportunity for our infrastructure software business”— Hock Tan, President and CEO

Broadcom began production shipments of the next-generation TPU v8i to Google, a new design with more memory and bandwidth than Ironwood, with performance comparable to or surpassing the Vera Rubin GPU.

“In performance, it is comparable to, if not surpasses, the Vera Rubin GPU.”— Hock Tan, President and CEO

Jalapeno, OpenAI's first-generation custom accelerator, is now shipping and outperforms the Grace Blackwell GPU on inference workloads at roughly half the cost, exceeding expectations for a first-generation custom chip.

“which outperforms Grace Blackwell GPU for inference workloads”— Hock Tan, President and CEO

Broadcom launched VMware Private AI Cloud, a new platform enabling enterprises to build and run AI workloads alongside existing applications with data protection and compliance, extending the software portfolio into AI infrastructure.

Per Hock Tan, President and CEO

Q3 gross margin fell 210 basis points sequentially to 75% as AI semiconductor revenue became a larger share of the mix, though this still came in better than the prior guidance of 74%.

“This was better than our guidance of 74%.”— Amie O'Toole, Chief Financial Officer

Q4 consolidated gross margin is guided to approximately 73%, down further from 78% a year ago, as increasing memory content in XPUs continues to dilute margins more than before.

“we expect our Q4 consolidated gross margin to be approximately 73%, down from 78% a year ago”— Amie O'Toole, Chief Financial Officer

Q3 operating margin reached a record 67.9%, up 240 basis points year-over-year, even as gross margin declined, because operating leverage let revenue growth of 127% far outpace expense growth of 22%.

“operating margin increased 240 basis points year-over-year to 67.9% because of the phenomenal operating leverage we are achieving”— Amie O'Toole, Chief Financial Officer

Q4 operating margin is guided flat year-over-year at approximately 66%, despite gross margin compressing from 78% to 73%, as management expects continued strong operating leverage to offset the mix-driven margin dilution.

“we expect Q4 operating margin to be approximately 66%, flat from a year ago because our strong revenue growth drives substantial operating leverage”— Hock Tan, President and CEO

Semiconductor Solutions segment operating expenses grew only 22% year-over-year versus 127% segment revenue growth, a widening gap that management highlighted as driving substantial operating leverage.

Per Amie O'Toole, Chief Financial Officer

Broadcom is now shipping its TPU v8i to Google ahead of MediaTek's competing v8t chip, even though MediaTek's development effort began earlier, reflecting a shift in relative execution speed versus a competitor.

“Broadcom is now shipping the TPU version 8i ahead of the MediaTek version v8t, which, in fact, was initiated earlier”— Hock Tan, President and CEO

Tomahawk 6 has become a phenomenal success, now deployed across nearly all AI hyperscalers building XPUs, including customers not using Broadcom's own XPUs, strengthening Broadcom's competitive networking position.

“our Tomahawk 6 has been a phenomenal success”— Charlie Kawwas, President, Semiconductor Solutions Group

Broadcom established a new AI XPV financing platform with Apollo and Blackstone in June to enable over 20 gigawatts of compute infrastructure for OpenAI and Anthropic by 2028, with a first $35 billion tranche already closed for Anthropic's 1 gigawatt deployment.

“we established the AI XPV platform in partnership with Apollo and Blackstone”— Amie O'Toole, Chief Financial Officer

Q4 capital expenditure guidance rose to $1.4 billion from $532 million actually spent in Q3, as the company invests to expand semiconductor capacity to meet growing AI demand.

“In Q4, we expect capital expenditures of $1.4 billion as we invest in capacity for semiconductors”— Amie O'Toole, Chief Financial Officer

Broadcom is significantly expanding capacity at its EML, CW laser, VCSEL and indium phosphide factories, more than tripling output year-over-year in some cases, with further large expansions planned over the next two years to meet optical interconnect demand.

“more than tripling year-over-year in some cases”— Charlie Kawwas, President, Semiconductor Solutions Group