Broadcom (AVGO) AI Revenue Soars, But Wall Street Wants More

On September 2, Broadcom Inc. (NASDAQ:AVGO) reported strong financial results for its third quarter of fiscal year 2026, driven by continued strength in AI-related demand.

However, despite the company's blockbuster numbers, its outlook fell slightly short of Wall Street's elevated estimates. This prompted some analysts to remain cautious despite the company's strong performance.

Broadcom Inc. (NASDAQ:AVGO) generated revenue of $29.6 billion in the third quarter, an increase of 86% year-over-year. Non-GAAP operating income also rose 92% year-over-year. The company said demand for its custom AI accelerators and networking remained very strong as Q3 AI semiconductor revenue grew 221% year-over-year and 54% quarter-over-quarter to reach $16.7 billion.

The company expects this momentum to continue into the fourth quarter as it guided for AI semiconductor revenue of $21.7 billion, representing an increase of 236% from the prior-year period.

Despite Broadcom Inc.'s (NASDAQ:AVGO) robust results, Wall Street's reaction has been more measured. The company's Q4 revenue guidance of approximately $34.8 billion came in below analysts' average estimate of $35.03 billion, according to data compiled by LSEG. While the guidance still implies 93% year-over-year growth, it fell short of elevated market expectations.

Following the results, Truist Securities lowered its price target on Broadcom Inc. (NASDAQ:AVGO) from $550 to $520 while keeping a Buy rating. The firm described the company's results and outlook as good, but not stellar or completely clean. Truist said the company's AI revenue outlook came in slightly below consensus expectations.

Truist analyst William Stein also noted that Broadcom Inc. (NASDAQ:AVGO) is indicating a stronger growth outlook for the next two years. Given the size of the projects involving gigawatt-scale deployments, the analyst viewed the company's guidance as beatable. However, Truist lowered its fiscal 2027 EPS estimate from $22.35 to $21.12.

RBC Capital also reaffirmed its Sector Perform rating on the stock with a price target of $400 after the company's recent results and outlook. RBC sees the risk/reward profile as balanced. Strong customer engagements and multi-year visibility provide support for the stock, but these are offset by supply and infrastructure limitations, along with what RBC believes is a high bar for fiscal 2027 and 2028.

Hedge fund ownership of Broadcom Inc. (NASDAQ:AVGO) declined slightly in the second quarter of 2026. According to Insider Monkey 's database, 170 hedge funds held positions in the stock in the second quarter of 2026, compared with 173 funds in the first quarter.