Key Takeaways
- Broadcom’s fiscal Q3 2026 earnings announcement is scheduled for September 2, with analyst consensus projecting EPS of $3.22, representing a 90.5% year-over-year surge
- Projected revenue stands at $29.24 billion, marking an impressive 83.3% annual growth rate
- The company partnered with OpenAI to create the Jalapeño inference chip, which demonstrated superior performance compared to Nvidia’s Blackwell processors in initial testing
- A massive $21 billion TPU order from Anthropic, backed by a long-term supply agreement, strengthens Broadcom’s position
- Analyst consensus rates AVGO as a Strong Buy, with a mean price target of $511 representing potential 37.5% gains
As Broadcom approaches its fiscal third-quarter earnings announcement scheduled for September 2, the semiconductor giant enjoys strong support from the investment community. Shares of AVGO were changing hands near $371.54 in pre-earnings trading, reflecting a 4.49% daily increase.
Wall Street’s consensus estimates point to earnings per share reaching $3.22, representing a remarkable 90.5% increase compared to the same period last year. On the revenue front, analysts are modeling $29.24 billion, which would translate to 83.3% year-over-year expansion.
Christopher Rolland from Susquehanna maintained his Buy recommendation while setting a $490 price objective. His outlook calls for results that come in “generally in-line-to-slightly-positive,” with AI networking solutions and software divisions providing the momentum.
Rolland identified supply chain bottlenecks affecting advanced semiconductor fabrication nodes as a potential headwind that could cap near-term growth in AI processing chips. Despite this concern, his overall stance on Broadcom’s custom silicon division remains optimistic.
The broader analyst community shares this positive sentiment. AVGO commands a Strong Buy rating derived from 24 Buy recommendations and three Hold ratings. The consensus price objective of $511 suggests approximately 37.5% appreciation potential from present trading levels.
Custom TPU Production Anchors Revenue Expansion
The largest contributor to Broadcom’s top-line performance comes from its collaboration with Alphabet on specialized AI accelerators called Tensor Processing Units. Alphabet has expanded its capital expenditure allocation to a range between $195 billion and $205 billion, with intentions to escalate spending in the coming year.
A substantial $21 billion order for TPUs from Anthropic underscores the demand trajectory, secured through a multi-year supply arrangement between the three organizations. Under this structure, Broadcom captures the chip manufacturing revenue while Alphabet receives licensing compensation.
The company maintains its status as Alphabet’s principal collaborator for flagship training processors, establishing a sustained competitive moat in this lucrative segment.
Expanding beyond TPUs, Broadcom recently collaborated with OpenAI on the development of the Jalapeño inference processor. Initial performance benchmarks showed the chip exceeding Nvidia’s Blackwell architecture and existing TPUs. OpenAI has outlined deployment plans for Jalapeño across its infrastructure before the current year concludes.
Strategic Memory Partnerships and Photonic Solutions Strengthen Position
Broadcom has finalized a comprehensive $200 billion agreement with Samsung Electronics covering high-bandwidth memory procurement, fabrication services, and sophisticated packaging capabilities extending through 2030. Additionally, the company has reserved advanced manufacturing capacity with Taiwan Semiconductor Manufacturing.
Access to HBM represents a significant strategic differentiator. Nvidia has claimed substantial portions of SK Hynix’s production volume, AMD has established Samsung as its supplier, and Micron’s HBM manufacturing represents approximately one-third the scale of its South Korean competitors. This leaves minimal opportunity for additional market participants.
The company has also emerged as a dominant force in photonic networking technologies, experiencing rapid adoption within AI-focused data center environments. Broadcom maintains leadership in optical digital signal processors and co-packaged optics solutions, embedding optical transceivers directly within its custom processors.
Trading at a forward price-to-earnings ratio near 18 times fiscal 2027 projections, the valuation appears attractive relative to the anticipated growth trajectory.
The ownership structure shows public entities and retail investors controlling 33.13% of AVGO shares. Vanguard represents the dominant institutional position with an 8.71% stake.
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