Everything Is Going Right for Broadcom, So It’s Time to Accumulate AVGO Stock

Sneha Nahata

Thu, September 3, 2026 at 6:42 PM GMT+3 4 min read

Broadcom's (AVGO) latest earnings report and guidance provide reasons to remain bullish about the company's outlook. The semiconductor company posted solid third-quarter fiscal 2026 results, showing that demand across its business remains strong.

Although AVGO shares came under pressure after the earnings announcement because the company's forward guidance came in slightly below expectations, the underlying business trends remain encouraging. Given the AI-driven momentum Broadcom is seeing, there is a good chance its Q4 outlook is simply conservative, leaving room for the company to beat analyst estimates.

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AVGO stock has also faced some selling pressure after a significant run in recent months. Profit-taking and concerns about intensifying competition in the custom AI chip market have added to the pressure. For example, Marvell Technology (MRVL) has expanded its presence in custom AI silicon and secured a deal with Alphabet's Google (GOOG) (GOOGL).

Despite the concerns, Broadcom's growth has not shown any signs of slowing, and demand for its custom AI accelerators remains strong. As AI infrastructure spending continues to expand, Broadcom appears well positioned to benefit.

With the stock having pulled back from its recent highs while the business continues to perform well, the current weakness is an opportunity to accumulate AVGO gradually.

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Broadcom's Growth Remains Solid Despite Competition Fears

Broadcom's growth remains strong even as concerns about competition continue to grow. The company had another record quarter, with revenue, operating income, and free cash flow all reaching new highs. A major reason was the continued strength of its AI business. AI semiconductor revenue jumped 221% from a year earlier, pushing total revenue to $29.6 billion, an 86% year-over-year (YoY) increase. Operating income rose 92%, while the operating margin reached a record 68%.

AI demand remains strong. Revenue from AI semiconductors more than tripled year over year to $16.7 billion, helped by growing adoption of custom AI accelerators among Broadcom's six XPU customers. The company delivered its Ironwood TPU v7 to Anthropic and Google and has already started shipping the newer TPU v8i to Google.

Broadcom also shipped OpenAI's first custom accelerator, and the overall XPU shipments increased more than 3.5 times year over year and accounted for 73% of quarterly AI revenue. AI networking revenue also grew by more than 2.5 times.

Momentum is expected to strengthen in Q4. Broadcom plans to increase shipments to Anthropic, ramp TPU v8i production for Google, continue deliveries to OpenAI, and begin production shipments of Meta's (META) custom MTIA accelerator.

Broadcom's Q4 AI revenue is projected to hit $21.7 billion, up 236% YoY, bringing fiscal 2026 AI revenue to approximately $58 billion, up 186%.

Management also sees considerable room for further expansion. Broadcom expects demand from major frontier-model developers to expand significantly through 2027 and 2028. Its long-term partnership with Google is expected to generate billions in sales. Moreover, deployments with Anthropic and OpenAI are also set to expand significantly.

Looking ahead, Broadcom expects AI revenue to roughly double to $115 billion in 2027 and double again to about $230 billion in 2028. The outlook reflects solid AI-driven growth. The company also expects fiscal 2028 earnings per share (EPS) to exceed $30, up from analysts' projected EPS of $17.54 for fiscal 2027.

Overall, Broadcom's outlook indicates that demand for its custom AI accelerators remains exceptionally strong. While competitive pressures warrant attention, the company's expanding relationships with major AI developers, rising accelerator shipments, and growing AI networking business continue to strengthen the investment thesis.

Broadcom's Valuation Doesn't Look Stretched

Broadcom's valuation doesn't look stretched at current levels, which leaves room for AVGO shares to move higher. The stock is trading at 36.1 times forward earnings, but that seems reasonable given the strong EPS growth expected over the next few years.

Analysts expect Broadcom's earnings per share to jump by more than 71% in fiscal 2027. Management is also forecasting EPS of over $30 in fiscal 2028, which would translate into another 71% increase.

Accumulate AVGO Stock

Despite intensifying competition, Broadcom continues to benefit from strong demand for its custom AI chips. The company's robust revenue momentum and potential for further earnings expansion indicate that the pullback in AVGO is an opportunity to accumulate the stock.

Broadcom's valuation also appears relatively justified given its expected growth. Analyst sentiment remains favorable as well, with a large majority of Wall Street analysts continuing to rate AVGO stock as a "Strong Buy."