Broadcom reported the quarter ended 2 August after the US close on 2 September with $29.591 billion of revenue and $3.32 of non-GAAP diluted earnings per share, against consensus of $29.47 billion and $3.23. Revenue beat by 0.4%, EPS by 2.8%. On a GAAP basis the quarter earned $2.68. The full figure set is on the release page.
The quarter cleared every bar it was set. The one that mattered was AI semiconductor revenue, guided in June to $16.0 billion: it came in at $16.7 billion, up 221% year on year and 54% sequentially, and 56.4% of the whole company. The stock still fell about 6% in the minutes after the release, then recovered through the call to close the after-hours session at $366.45, down 0.22% against a $367.24 close.
What the call carried was worth more than the quarter, and none of it is in the release. Management raised fiscal 2026 AI revenue to $58 billion from $56 billion, guided fiscal 2027 to approximately $115 billion, said it has line of sight to $230 billion in fiscal 2028, and — for the first time — disclosed what Broadcom earns per gigawatt of customer compute: "$20 billion-$30 billion per gigawatt."
What the preview asked, and what the print answered
AI semiconductor revenue against the $16.0 billion guide — $16.7 billion, a 4.4% beat. Our preview called this the most specific number Broadcom gave in June and the one every case in our model was set to. XPUs, not networking, did the work: shipments up over 3.5 times year on year and 73% of AI revenue, with networking up over 2.5 times. Neither split is in the release.
The fourth-quarter AI guide against the $20.8 billion residual — $21.7 billion, and the annual figure went up rather than holding. The preview's test was whether the fourth quarter would clear the number implied by the roughly $56 billion fiscal-year figure. It did, by 4.3%, and management then raised the year to $58 billion outright. The four quarters as guided sum to $57.6 billion; the company rounds to $58 billion.
Whether the more-than-$100 billion fiscal 2027 figure was repeated, raised or reframed — all three. It was raised to approximately $115 billion, which is a doubling of fiscal 2026 rather than the vaguer "more than $100 billion" of June. It was reframed twice over: management attached the words "we have secured the supply" to it, extended the horizon to a $230 billion fiscal 2028, and attached an earnings figure — "we are very much on target to exceed $30 in earnings per share in fiscal 2028." The customer count did not change: still six XPU customers, of whom four Tan says "are just simply going to be huge."
Non-GAAP operating margin against 67%, gross margin against April's 69.5% — 67.9% and 69.1%. The operating line came in above the guide while GAAP gross margin slipped 35 basis points sequentially, which is the AI mix doing exactly what management said it would. The leverage the company keeps citing is real and it is not in gross margin at all: total operating expenses fell 6.5% against the year-ago quarter, and research and development fell 5.1%, while revenue grew 85.5%.
Non-GAAP EPS against $3.22-3.24, GAAP against April's $1.91 — $3.32 and $2.68. The two bases are now 64 cents apart, wider than April's 53 cents. Consensus is set on the first; only the second is comparable to the earnings series this site carries.
What changed in the story
Broadcom started describing its AI business in gigawatts, and priced them. For three quarters the AI figure has been a single number in a chief executive's quote with nothing underneath it. This call gave a customer-by-customer roadmap — Anthropic 1 gigawatt of Ironwood in 2026, 5 gigawatts in 2027 and an incremental 10 in 2028; OpenAI 1.3 gigawatts in 2027 and over 5 in 2028; Meta 3 gigawatts through 2028 — and then the conversion rate: $20-30 billion of Broadcom content per gigawatt. That single disclosure turns the AI line from an assertion into something a reader can check.
Capital went to the balance sheet, not to shareholders. Broadcom repurchased no shares at all in the quarter, against $600 million in April and $8.45 billion in the first quarter, while free cash flow hit a record $13.665 billion. It paid down $5.6 billion of long-term debt and a further $1.5 billion after the quarter ended, taking total debt from $65.1 billion at the fiscal year end to $59.4 billion. Cash rose to $24.0 billion.
The other two thirds of the company are flat. Non-AI semiconductors were about $4.2 billion, up 5% year on year and flat sequentially, guided to roughly $4.3 billion. Infrastructure software was $8.752 billion and is guided to "stabilize at approximately $8.7 billion" — the first guided sequential decline in that line since the VMware repricing began.
A new chief financial officer signed her first quarter, and adjusted EBITDA — a headline bullet and a guided metric in prior releases — is absent from this one entirely.
Against the model
Our Broadcom model was rebuilt on this print. The AI line is now a capacity build priced at the disclosed $25 million per megawatt — the midpoint of management's own $20-30 billion per gigawatt — rather than the estimate it used before, and it reproduces the guided quarter and the fiscal 2027 figure: $34.70 billion of fourth-quarter revenue against the $34.8 billion guide, $21.7 billion of fourth-quarter AI revenue, and $115.0 billion of fiscal 2027 AI revenue.
It does not reach fiscal 2028. That is the finding, and it is arithmetic rather than scepticism. Reaching $115 billion in fiscal 2027 from a $21.7 billion fourth quarter requires the sequential build to decelerate sharply through that year — the four quarters average $28.75 billion. Doubling again to $230 billion in fiscal 2028 then requires it to re-accelerate, to an average of $57.5 billion a quarter. A build rate that decays smoothly cannot do both. Ours decays, and lands fiscal 2028 AI revenue near $132 billion, about 43% below management's line of sight.
We have put the $230 billion path in the bull case rather than fitting it into the base, and said so on the page. Note that management's own roadmap describes exactly such a step-up — Anthropic going from 5 gigawatts to an incremental 10, OpenAI from 1.3 to over 5. The disagreement is not about what was said; it is about whether a second consecutive doubling four years out belongs in a base case. At a $367.24 close the base fair value is $250.25, and the terminal carries 68% of enterprise value, so one turn of the exit multiple is worth about $25 a share — more than the whole argument above is worth in any single year.
What is coming
The fourth quarter ends 1 November 2026. Management guided consolidated revenue to approximately $34.8 billion, up 93% year on year and 17.6% sequentially; AI semiconductor revenue to $21.7 billion; non-GAAP operating margin to approximately 66% of revenue, a point below what the third quarter delivered; and capital expenditure to about $1.4 billion, nearly triple the $532 million just spent, as Broadcom invests in semiconductor capacity. There is no EPS guide and no reconciliation of the projected non-GAAP measures.
What we learned
- AI is now 56% of Broadcom. $16.7B of AI semiconductor revenue against $29.591B total, up from 49% in April, and XPUs were 73% of it. Strip the AI figure out and the rest of the semiconductor segment grew about 5%.
- The fiscal-year AI numbers were raised and extended. $58B for fiscal 2026, up from $56B; about $115B for fiscal 2027 on "secured" supply; line of sight to $230B in fiscal 2028, and EPS above $30 that year.
- Broadcom disclosed its content per gigawatt for the first time: $20-30 billion. With a customer gigawatt roadmap through 2028, the AI line stops being a single quoted number and becomes something a reader can check.
- Operating expenses fell 6.5% while revenue grew 85.5%. R&D was down 5.1% year on year. That, not gross margin — which slipped to 69.1% — is where 171% GAAP operating income growth came from.
- No buyback at all, and $7.1 billion of debt repaid. Zero repurchases against $8.45B in the first quarter, $5.6B of debt paid down in the quarter and $1.5B after it, on record free cash flow of $13.665B.
Broadcom reported the quarter ended 2 August 2026 after the US close on 2 September 2026. Revenue, the segment split, the GAAP and non-GAAP results and their bridge, cash flow, the balance sheet and all fourth-quarter guidance are the company's own, from its results release; the full figure set is on the Q3 FY2026 earnings page. Quotations and every AI figure — the $16.7 billion quarter, the fiscal 2026, 2027 and 2028 outlooks, the content per gigawatt, the customer gigawatt roadmap, the XPU and networking shares, the segment margins and the fourth-quarter capital expenditure — are from the earnings call held the same afternoon and sit on the call page; AI semiconductor revenue is not a reported segment and Broadcom publishes no reconciliation for it. Consensus of $3.23 on $29.47 billion is press-reported from third-party estimate feeds on a non-GAAP basis and is not a series this site stores or verifies. Ours rather than the company's: the non-AI semiconductor remainder, every margin and growth ratio computed from reported figures, the fiscal-year AI arithmetic, and the model comparison — our Broadcom model of 3 September 2026, whose fair values, exit multiple and build-rate decay are assumptions, not company forecasts. The $367.24 close and $366.45 after-hours quote are 2 September 2026; a live quote will differ. All guidance is forward-looking.
