Broadcom (AVGO.US) will report its fiscal third-quarter 2026 results after today’s market close. The earnings release itself may matter less than the outlook for the coming quarters, as investors will primarily be looking for confirmation that the boom in custom AI accelerators is still accelerating, how that is affecting margins, and whether Broadcom’s growing involvement in AI infrastructure financing is beginning to increase balance-sheet risk. Nvidia shares rose by around 9% after its results, and the question now is whether Broadcom can deliver a strong enough report to push the stock above key resistance levels after falling more than 20% from record highs. Broadcom’s current market capitalization exceeds $1.7 trillion, placing the semiconductor company among the 10 largest companies in the world.
- Consensus calls for revenue of $29.44 billion, up 85% year over year and 33% quarter over quarter. That is slightly above the company’s previous guidance of around $29 billion.
- Adjusted net income is expected to reach around $16.0 billion, nearly double the level recorded a year earlier.
- Gross margin will be an important focus, with consensus expecting it to decline to around 74.1% from 77.1% in the previous quarter.
- Broadcom previously guided for around $16 billion in AI semiconductor revenue in Q3. Against its current full-year target of $56 billion, that would imply roughly $20.8 billion needed in Q4.
- As a result, Q4 guidance around $21 billion would likely be seen as broadly in line with expectations. A figure of $22 billion or more could be interpreted as a signal that demand is continuing to accelerate ahead of FY2027.
- Investors will also be looking for any update on next year’s AI revenue target, which the company currently describes as more than $100 billion.
Margins under pressure from a rising XPU mix?
Broadcom is increasingly relying on custom XPU accelerators as a key growth engine. This business is expanding very rapidly, but its margins are lower than those generated by AI networking and infrastructure software.
That is why keeping gross margin close to 74% will be an important test of the quality of Broadcom’s growth. If AI revenue continues to accelerate while margins stabilize, the market may conclude that the company is scaling the business effectively despite a less favorable product mix.
A further decline in gross margin toward 72–73%, however, could raise concerns about profitability in FY2027. VMware remains a partial buffer, as its high-margin infrastructure software revenue helps offset some of the pressure coming from hardware.
AI financing is becoming an increasingly important issue for investors
The way massive AI infrastructure projects are financed is also drawing growing attention. Broadcom is developing an infrastructure financing structure together with Apollo and Blackstone, based on its XPU and networking solutions.
The first project is worth around $35 billion and relates to infrastructure for Anthropic. Broadcom also has some exposure to the customer’s lease obligations, highlighting that the company is no longer acting purely as a chip supplier, but is also partially supporting the financing of the broader ecosystem.
There have also been reports of additional, significantly larger AI-related financing packages. The key question is therefore how much of future growth will be funded directly by customers and how much may require guarantees or other forms of support from Broadcom.
Broadcom (AVGO.US) chart, D1 interval
The shares are trading below the 200-day EMA (red line), and so far they have almost always returned to growth relatively quickly after falling below this technical support. If the earnings report and guidance are very strong, the stock could potentially move toward around $390 from current levels, near the 50-day EMA shown by the orange line. On the other hand, further weakness could point to a likely retest of the $320 area or the local lows from the spring of this year.
The most constructive scenario would be a combination of strong Q4 AI guidance, higher expectations for full-year 2027, and gross margin stabilization around 74%. If XPU growth remains very strong but margins continue to decline while Broadcom’s involvement in infrastructure financing increases, investors may begin to focus not only on the scale of AI growth, but also on its cost and quality.
Source: xStation5
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