Broadcom AVGO is ready to report its third-quarter fiscal 2026 outcomes on Sept. 2.
For the third quarter of fiscal 2026, Broadcom expects revenues of roughly $29.4 billion, indicating 84% year-over-year progress. The Zacks Consensus Estimate for revenues is pegged at $29.47 billion, suggesting progress of 84.74% from the year-ago quarter’s reported determine.
The consensus mark for earnings has been unchanged at $3.22 per share over the previous 30 days, indicating 90.53% progress from the determine reported in the year-ago quarter.
Consensus Earnings Trend
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Broadcom’s earnings beat the Zacks Consensus Estimate in all the trailing 4 quarters, the common earnings shock being 2.19%.
Let us see how issues have formed up for AVGO shares previous to this announcement.
Factors to Note Prior to Broadcom’s Q3 Earnings
Broadcom’s third-quarter fiscal 2026 efficiency is anticipated to have benefited from accelerating demand for AI semiconductors, enhancing non-AI semiconductor developments and stronger infrastructure software program revenues. For the third quarter of fiscal 2026, Semiconductor revenues are projected to succeed in roughly $20.5 billion, up 124% 12 months over 12 months, whereas infrastructure software program revenues are forecasted to be roughly $8.9 billion, up 31%. The sturdy outlook displays continued enlargement throughout each Broadcom’s semiconductor and VMware companies.
AI semiconductors are more likely to stay the main progress driver. For the third quarter of fiscal 2026, Broadcom expects AI semiconductor revenues to speed up to roughly $16 billion in the third quarter, representing progress of greater than 200% 12 months over 12 months. Demand for customized XPUs and AI networking merchandise stays exceptionally sturdy, with AI semiconductor bookings exceeding $30 billion in the fiscal second quarter in contrast with $10.8 billion of shipments. The firm expects AI semiconductor revenues to double in the second half of 2026 in contrast with the first half, reflecting sturdy buyer commitments and a robust pipeline of multi-gigawatt partnerships with main AI builders akin to Google, Anthropic, OpenAI and Meta.
Broadcom’s non-AI semiconductor enterprise can be anticipated to have contributed to fiscal third-quarter progress as cyclical circumstances enhance. Non-AI semiconductor revenues have been $4.2 billion in the second quarter of fiscal 2026, up 6% 12 months over 12 months, whereas bookings exceeded $6 billion, indicating strengthening demand. Broadband, server storage, and enterprise networking delivered progress regardless of seasonal weak point in wi-fi. Reflecting this restoration, Broadcom expects fiscal third-quarter non-AI semiconductor revenues of roughly $4.5 billion, up 12% 12 months over 12 months.
However, Broadcom’s third-quarter fiscal 2026 outcomes are anticipated to face gross-margin stress from a heavier mixture of lower-margin AI semiconductors, notably TPUs. The firm expects consolidated gross margin to say no to about 74%, regardless of sturdy working leverage.
AVGO Shares Underperform Sector
AVGO shares have rallied 7% 12 months so far (YTD), underperforming the broader Zacks Computer and Technology sector’s return of 17.1%. The firm has underperformed its friends in the year-to-date interval, together with Cisco Systems CSCO, Hewlett Packard HPE and Marvell Technology MRVL, that are additionally increasing their footprint in the AI infrastructure area. Shares of Cisco Systems, Hewlett Packard Enterprise and Marvell Technology have surged 43.5%, 117.5% and 149.1%, respectively, over the similar timeframe.
AVGO Stock’s Price Performance
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The AVGO inventory is just not so low-cost, as the Value Score of D suggests a stretched valuation at this second.
In phrases of the ahead 12-month value/earnings (P/E), Broadcom shares are buying and selling at 10.75X, larger than the Computer and Technology sector’s 6.18X, Cisco’s 6.06X and Hewlett Packard’s 1.39X however decrease than Marvell’s 12.64X.
AVGO Stock’s Valuation
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Strong AI Portfolio Aids Broadcom’s Long-Term Prospects
Broadcom’s AI momentum is anticipated to proceed, because of a clientele that features Google, Anthropic, OpenAI and Meta. The firm has a long-term settlement with Google to develop and provide a number of generations of TPUs and AI networking merchandise. Anthropic is anticipated to realize entry to a different 5 gigawatts of next-generation TPU-based compute starting in 2027, whereas OpenAI has dedicated to deploying 1.3 gigawatts in 2027. Broadcom can be working with Meta on a number of generations of MTIA XPUs, with 3 gigawatts anticipated to be deployed by 2028.
The firm’s networking portfolio additional strengthens its AI positioning. Broadcom provides Ethernet switches, PCI Express merchandise, DSPs, lasers, NICs and routers that join large-scale XPU and GPU clusters. Its Tomahawk 6, Jericho material options and co-packaged optics capabilities place the firm to learn as AI clusters scale throughout racks and knowledge facilities.
Broadcom expects fiscal 2026 AI semiconductor revenues of $56 billion, up roughly 180% 12 months over 12 months, and continues to forecast greater than $100 billion in fiscal 2027. Management additionally expects AI demand to stay sturdy into fiscal 2028, supported by accelerating compute-capacity necessities and rising Broadcom content material per gigawatt throughout successive XPU generations. These developments bode effectively for AVGO’s long-term progress prospects.
Conclusion
Broadcom’s sturdy portfolio displays stable top-line progress potential over the long term. However, gross margin stays beneath stress, and a stretched valuation makes the inventory a dangerous guess forward of third-quarter fiscal 2026 outcomes.
AVGO at the moment has a Zacks Rank #3 (Hold), which suggests that buyers ought to watch for a good entry level to build up the inventory. You can see the full record of at present’s Zacks #1 Rank (Strong Buy) shares right here.
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