Broadcom Inc (NASDAQ: AVGO) is scheduled to release its fiscal 2026 third-quarter results after the US market close on September 2nd, covering the period ending July 31st. A conference call with CEO Hock Tan and CFO Kirsten Spears will follow at 5:00 PM Eastern Time, with a webcast available through the investor relations page. This report marks the final heavyweight AI chip earnings release of the season, coming on the heels of Nvidia's record-breaking quarter this week.

Shares of Broadcom closed at $369.68 on September 1st, giving the company a market capitalization of roughly $1.75 trillion. The stock has traded within a 52-week range of $287.17 to $495.00. Options markets are pricing in an implied volatility of approximately 8.16% for at-the-money straddles expiring September 4th, suggesting a potential move of about $30 in either direction.

During its June 3rd second-quarter call, management laid out the guidance for the current period: consolidated revenue of approximately $29.4 billion, representing 84% year-over-year growth. Semiconductor revenue is pegged at $20.5 billion (up 124% YoY), with AI semiconductor revenue of roughly $16 billion reflecting growth exceeding 200% from the prior year. Infrastructure software is guided at $8.9 billion, a 31% increase. Non-GAAP operating margin is expected to hold near 67%, with adjusted EBITDA around 68% of revenue. Gross margin is projected to dip to approximately 74%, which management attributes to the rising mix of AI semiconductors rather than any deterioration in per-unit profitability.

CFO Kirsten Spears noted during the prior call that the combination of substantial revenue growth with stable margins demonstrates meaningful operating leverage. It's worth noting these figures represent company guidance rather than audited results.

Wall Street consensus has largely aligned with the guided ranges, with expectations for revenue between $29.2 billion and $29.5 billion and adjusted earnings per share in the $3.21 to $3.24 range. For context, the year-ago quarter delivered revenue of $15.95 billion and EPS of $1.69, implying growth rates of roughly 84% and 91%, respectively. While Broadcom has beaten EPS estimates for four consecutive quarters, the second quarter did present a slight revenue miss at $22.19 billion (48% YoY growth) versus expectations of $22.1–$22.3 billion, which triggered an after-hours decline of over 13% at the time. That quarter also saw AI semiconductor revenue of $10.8 billion (up 143% YoY) with orders surpassing $30 billion. This experience has shifted market attention from simply hitting consensus numbers to how management frames the fourth quarter and fiscal 2027 outlook.

Morgan Stanley's Framework: Custom Chips and Networking as Dual Engines

Morgan Stanley maintains an Overweight rating on Broadcom, projecting third-quarter revenue of $29.4 billion — up 84.3% year-over-year and 32.5% sequentially. Within this, AI revenue is estimated at $16 billion (up 48% quarter-over-quarter), broken down into approximately $10.8 billion from custom ASICs and $5.2 billion from AI networking. The firm expects gross margin of 74.0%, slightly above consensus of 73.5%, with EPS of $3.24 versus the consensus $3.22.

Looking further ahead, Morgan Stanley forecasts fourth-quarter revenue reaching $34.8 billion (up 93.4% YoY), with AI revenue climbing another 32% sequentially to $21.2 billion. Other research houses have modeled similar figures, with some projecting Q4 revenue of $34.9 billion and EPS of $3.89.

For the full fiscal 2026 year, Broadcom guidance for AI semiconductor revenue remains at $56 billion, representing roughly 180% growth. Management has reiterated its fiscal 2027 target of exceeding $100 billion, corresponding to approximately 10 gigawatts of shipments. While 2026–27 capacity is largely committed, planning for 2028–29 has already begun. Core customers include Google, Anthropic, OpenAI, and Meta under multi-year agreements, and two additional clients contributed roughly $6 billion in AI orders during the second quarter.

Management continues to advance its XPU platform and compute financing structures to expand capacity for frontier model customers. Benchmark analysts value the stock at 19.2 times fiscal 2027 EPS and 14.3 times fiscal 2028 EPS — figures on the lower end for AI peers — with a price target of $545. The broader consensus price target sits near $512, with ratings predominantly at Strong Buy.

Software and Non-AI Semiconductors: A Secondary Growth Engine

The infrastructure software segment, which includes VMware, carries third-quarter guidance of $8.9 billion, up 31% year-over-year. On August 31st, Broadcom introduced multiple new software product lines in a single day, spanning private AI cloud, AI factories, cloud foundations, Tanzu data fabric, and agent governance solutions.

The non-AI semiconductor business generated over $6 billion in orders during the second quarter, reflecting cyclical recovery across broadband, server storage, and enterprise networking. On a trailing twelve-month basis, revenue reached $75.5 billion (up 32% YoY), with net income of $29.3 billion (up 127% YoY). Profit retention per dollar of revenue stands at approximately 39 cents, up from 23 cents a year earlier. During the second quarter, Broadcom returned $3.1 billion to shareholders through quarterly dividends of $0.65 per share.

Key Questions for the Earnings Call

Although the company has set the $16 billion AI revenue figure as the baseline for the third quarter, some market models from June anticipated even higher numbers. Investors will be listening closely for clarity on several fronts: whether fourth-quarter AI revenue can break through the $20 billion threshold, if the full-year $56 billion guidance will be revised upward, whether the fiscal 2027 target of $100 billion will be adjusted, and if the 10-gigawatt shipment plan can translate into verifiable purchase orders and data center readiness. Additional questions include whether Google might divert some orders to other suppliers, and whether the 74% gross margin could be further compressed by product mix effects.

Nvidia's recent guidance of approximately 70% revenue growth for the coming fiscal year raises the bar for Broadcom to demonstrate it can capture an outsized share of the market. The roughly 8% implied volatility from options pricing reflects expected movement rather than a directional signal. The actual results will be revealed after the close on September 2nd.