Broadcom beats Q3 estimates but Q4 guidance misses, shares fall 3%+ after hours

Sarah Holzmann Wed, September 2, 2026 at 2:14 PM PDT | 4 min read

• AVGO
• ^SOX

Broadcom (AVGO) reported fiscal third-quarter results after the close on Wednesday, September 2, delivering a beat on both revenue and earnings but failing to impress investors with its forward outlook.

The stock fell more than 3% in after-hours trading, extending what has been a disappointing year for shareholders. AVGO is up only about 1% year-to-date against a 64% gain for the broader PHLX Semiconductor Index.

Broadcom's Guidance Falls Short

The headline numbers were solid. Revenue came in at $29.59 billion, up 86% year over year and slightly above the consensus estimate of roughly $29.2 billion to $29.5 billion. Adjusted earnings per share of $3.32 also topped the Street's expectation of approximately $3.22.

Artificial intelligence (AI) semiconductor revenue was the standout, reaching $16.7 billion for the quarter – well ahead of the approximately $15.9 billion to $16.0 billion analysts had modeled. This represents growth of 221% year over year and 54% sequentially.

The problem for bulls was the fourth-quarter guidance. Broadcom projected revenue of approximately $34.8 billion at the midpoint, which fell modestly short of the $35.0 billion to $35.05 billion consensus. This slim miss, in a market that had already priced in aggressive AI-driven growth, was enough to trigger selling.

CEO Hock Tan attempted to reassure investors by highlighting that AI semiconductor revenue is expected to accelerate to $21.7 billion in the fourth quarter, which would represent 236% year-over-year growth.

"Demand for our custom AI accelerators and networking continues to be very strong," noted Tan in a press release.

However, the market is focused squarely on the top-line guidance gap.

Several competitive and structural headwinds weighed on sentiment heading into the report:

• Marvell (MRVL) recently closed a custom chip partnership with Google (GOOG) (GOOGL) that could generate up to $120 billion in revenue through fiscal 2033, raising questions about Broadcom's share of hyperscaler spending.
• Broadcom has been navigating supply constraints and in July signed a multi-year manufacturing agreement with Samsung Electronics valued at more than $200 billion to diversify its production base.

A Deeper Dive Into Fiscal Q3 at Broadcom

The quarterly results showed Broadcom's semiconductor-solutions segment generating $20.8 billion in revenue, up 70% year over year, while infrastructure software contributed $8.8 billion, a 29% increase.

On a GAAP basis:

• Net income surged 216% to $13.1 billion
• Free cash flow reached $13.7 billion, representing 46% of revenue
• Cash on hand ended the quarter at $24.0 billion
• Quarterly dividend declared at $0.65 per share

Notably, billionaire investor Stanley Druckenmiller had already exited his entire Broadcom position during the second quarter – a move that now appears at least partially validated by the stock's post-earnings decline, though his exit may also reflect a broader reshuffling of AI exposure rather than a bearish call on the company specifically.

The Market's Negative Reaction to AVGO Earnings, Explained

The broader context matters as well. Rising Treasury yields, with the 10-year reaching 4.80%, have pressured high-multiple growth and technology stocks throughout early September, creating an unfavorable macro backdrop for a stock that needed to deliver an unambiguous beat-and-raise to justify its valuation.

With Broadcom trading at a premium heading into the print, the modest guidance shortfall leaves traders to weigh explosive AI growth against intensifying competition and a market environment that is increasingly punishing anything short of perfection.

This article originally appeared on Barchart.