AVGO Q3 2026: Broadcom AI Revenue Guided to $16B, Up 200%

I have the data needed. The user's brief contains "6B" but verified data shows $16B (likely a typo; the 200% YoY figure confirms $16B). Writing the article now.

Broadcom guided Q3 FY2026 AI semiconductor revenue to $16 billion, up more than 200% year-over-year.
Q2 FY2026 AI revenue hit $10.8 billion, a 143% annual gain; total revenue reached $22.2 billion, up 48%.
AVGO shares dropped roughly 15% as markets had expected Tan to raise the full-year AI revenue goal beyond $56 billion.

---

Broadcom forecast a record $16 billion in AI semiconductor revenue for its fiscal third quarter of 2026, more than tripling from the year-earlier period, while the AVGO stock slid on investor frustration that CEO Hock Tan left the full-year target unchanged.

Lead

Broadcom Inc. (NASDAQ: AVGO) reported second-quarter fiscal 2026 revenue of $22.2 billion — up 48% year-over-year — and issued guidance projecting AI semiconductor sales of $16 billion in the July quarter, a year-over-year increase of more than 200%. The results, released June 3, 2026, confirmed Broadcom's position as the dominant custom-chip supplier to hyperscale AI infrastructure builders, even as a market selloff punished the company for holding its full-year forecast steady.

What Happened

AI semiconductor revenue for the second quarter reached $10.8 billion, accounting for roughly 49% of total consolidated revenue and rising 143% from the same period a year earlier. Broadcom attributed the surge to accelerating demand for its custom AI accelerators — designed for specific hyperscale customers — and for the high-speed networking silicon that connects large clusters of those chips.

Adjusted earnings per share came in at $2.44 against a $2.40 consensus estimate, a slight beat. Total revenue of $22.19 billion narrowly missed the $22.27 billion Wall Street had penciled in.

For Q3 FY2026, Broadcom guided consolidated revenue to approximately $29.4 billion — an 84% year-over-year increase and above the $28.53 billion the Street expected. Semiconductor revenue for the quarter is forecast at $20.5 billion, up 124% annually. AI semiconductor revenue within that total is guided to $16 billion, which implies more than 200% year-over-year growth. Operating margins are expected to hold at roughly 67%.

CEO Hock Tan also disclosed a product-strategy adjustment: Broadcom will transition to a "chips only" model, stepping back from plans to deliver fully integrated AI systems to customers. The move concentrates the company's value proposition on its semiconductor design capability and removes system-level execution risk.

Market Reaction

AVGO fell approximately 15% in Thursday trading — a sharp reaction relative to the underlying earnings beat. The selling pressure stemmed from a single factor: Tan declined to raise the full-year AI semiconductor revenue target, reiterating guidance for AI revenue to exceed $56 billion in fiscal 2026 and surpass $100 billion in fiscal 2027. Investors who had anticipated an upward revision to the annual figure were disappointed, and the stock gave back a substantial portion of the gains it had accumulated in the months before the print.

Strategic Context

Broadcom's custom AI chip business — centered on application-specific integrated circuits, or ASICs, built to the specifications of individual hyperscale customers — has become a structural alternative to merchant accelerators. By designing chips tailored to a specific customer's model architecture and inference workload, Broadcom enables its partners to capture efficiency advantages not available from off-the-shelf silicon.

AI networking has been an equally important growth driver. Switches and connectivity silicon — most recently represented by the Tomahawk 6 platform — underpin the fabric linking tens of thousands of accelerators in next-generation training and inference clusters. The combination of accelerator and networking revenue gives Broadcom exposure to the full capital-spending cycle of large AI infrastructure builds.

The company's hyperscale customer base remains concentrated, which creates leverage with individual partners but also revenue concentration risk. That dynamic explains why the market parses Tan's statements on forward guidance so carefully: unchanged annual targets with accelerating quarterly guidance can signal either confident visibility or deliberate conservatism.

AI and Technology Angle

The Q3 forecast of $16 billion in a single quarter of AI semiconductor revenue illustrates how quickly AI semiconductor intensity has scaled across the industry. A year earlier, Broadcom's full-quarter AI chip sales were roughly $5.2 billion. The compound expansion reflects both the ramp of existing customer programs and the addition of new custom silicon programs that move from design to volume production.

The chips-only pivot is also notable: it places Broadcom squarely in the component layer rather than competing with systems integrators, a positioning that may widen the addressable customer set while avoiding channel conflicts with hyperscale partners that assemble their own infrastructure.

Outlook

Broadcom's Q3 FY2026 AI revenue guidance of $16 billion, up over 200% year-on-year, represents a decisive step-function acceleration in the company's AI semiconductor trajectory. With the full-year target reiterated at $56 billion and fiscal 2027 projections exceeding $100 billion, Tan's roadmap implies sustained double-digit sequential gains through the end of next year. The near-term question is whether that trajectory — visible and mathematically coherent — will satisfy investors expecting the high end of the annual range to be officially raised before the fiscal year closes.

Mentioned tickers: AVGO

Earnings }}