Broadcom Inc. (NASDAQ: AVGO) reported third-quarter revenue of $29.59 billion, surpassing analyst estimates of $29.36 billion. The semiconductor giant also delivered adjusted earnings of $3.32 per share, beating the consensus estimate of $3.24 per share.

AI Infrastructure Financing

CEO Hock Tan highlighted the company’s strategic pivot toward financing AI infrastructure for major customers. During the earnings call, Tan noted that only two of Broadcom’s six major AI chip customers require external financing: Anthropic and OpenAI. He described these companies as "two geniuses in the middle of Mongolia" who need capital support to scale their operations.

This financial support is channeled through Broadcom’s XPV platform, a vehicle launched in June in partnership with Apollo Global Management (NYSE: APO) and Blackstone Inc. (NYSE: BX). The company has already closed a $35 billion first tranche tied to Anthropic’s initial 1-gigawatt deployment.

Tan stated that each gigawatt of compute deployed by Anthropic or OpenAI could generate roughly $30 billion in annual revenue for those firms. He characterized this as "a hell of a business model," explaining why Broadcom is willing to finance buildouts rather than demand upfront cash payments.

Customer Outlook and IPOs

Tan projected that Anthropic is on track to overtake Alphabet Inc.’s (NASDAQ: GOOG) Google as Broadcom’s largest customer for custom AI chips in 2027. Anthropic is expected to sustain this lead through 2028, even as Google continues to increase its chip orders.

The CEO also referred to Anthropic’s expected initial public offering as an "open secret," noting that the company’s investment credit will change once it goes public. Anthropic, led by Dario Amodei, could go public later this year. Meanwhile, Sam Altman-led OpenAI confidentially filed draft IPO paperwork with the SEC in June, though reports suggest it may wait until 2027.

Guidance and Market Reaction

For the fourth quarter, Broadcom expects revenue of approximately $34.8 billion, which falls short of analyst estimates of $35.03 billion.

Shares of Broadcom closed 0.66% lower on Wednesday at $367.24 and fell 0.82% in extended trading. According to Benzinga edge rankings, the stock holds a Momentum score in the 50th percentile and a Growth score in the 31st percentile.

What the Numbers Show

The divergence between the strong third-quarter beat and the fourth-quarter miss highlights shifting expectations around near-term AI infrastructure spending. While operational execution exceeded expectations in Q3, the lower Q4 guidance suggests potential delays or pacing adjustments in customer deployments, particularly as large-scale financing deals like the $35 billion Anthropic tranche move from commitment to execution phases.

Broadcom Inc (NASDAQ: AVGO) reported a 221% year-over-year surge in third-quarter AI-related revenue to $16.7 billion, beating consensus estimates of $15.9 billion. The chipmaker also raised its fiscal 2027 AI revenue guidance to $115 billion, citing robust demand that continues to outpace current supply capabilities.

Earnings Performance

Broadcom’s total revenue for the quarter reached $29.6 billion, exceeding the consensus estimate of $29.2 billion. Earnings per share came in at $3.32, topping the expected $3.22.

The AI segment drove the growth, with XPU revenues up 250% year-over-year and networking revenues rising more than 150%. Sequentially, AI revenue grew by 54%. For the fourth quarter, management guided total revenue at $34.8 billion, in line with expectations, though implied earnings of $3.79 per share fell slightly short of the consensus estimate of $3.85 per share.

Long-Term Guidance and Supply Constraints

Broadcom significantly upgraded its long-term outlook, projecting AI revenue of approximately $230 billion in fiscal 2028. This implies total fiscal 2028 revenue of around $285 billion, which is about $50 billion above consensus estimates. Management also guided fiscal 2028 earnings to exceed $30 per share, well above the consensus of $26.38 per share.

Despite the strong numbers, analysts note that the company remains "severely supply-constrained." Rosenblatt Securities analyst Sajal Dogra highlighted that while Broadcom has secured sufficient supply to support these figures, factors such as power availability, shell readiness, and physical deployment continue to constrain the outlook. Demand is currently running above the company’s guidance levels.

Cantor Fitzgerald analyst C.J. Muse noted that buy-side expectations for fiscal 2027 AI revenue were as high as $140 billion, whereas Broadcom raised its guidance from a prior outlook of over $100 billion to $115 billion. JPMorgan analyst Harlan Sur added that Broadcom expects AI semiconductor revenue to double from around $58 billion in fiscal 26 to about $115 billion in fiscal 2027, then double again to approximately $230 billion in fiscal 2028.

Analyst Reactions

Several major banks raised their price targets following the results:

• Rosenblatt Securities: Reiterated Buy rating, raised price target from $500 to $600.
• Cantor Fitzgerald: Maintained Overweight rating, lifted price target from $525 to $600.
• KeyBanc Capital Markets: Reaffirmed Overweight rating and price target of $575.
• JPMorgan: Maintained Overweight rating and price target of $580.

JPMorgan analyst Harlan Sur noted that Broadcom’s customer diversification, including deals with Alphabet Inc (NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: META), Anthropic, and OpenAI, is a strong positive. He suggested that if Broadcom faces similar supply constraints as NVIDIA Corp (NASDAQ: NVDA), underlying demand could exceed $145 billion in fiscal 2027 and $270 billion in fiscal 2028.

Rosenblatt Securities analyst Sajal Dogra stated that upside to this outlook would depend on "Broadcom's ability to unlock additional supply capacity and on customers completing their data-center deployments on schedule." He further noted this creates a "longer and stronger revenue pipeline" for the company as roughly 30GW is deployed through fiscal 2028 and beyond.

Market Reaction

Shares of Broadcom declined 6.7% to $342.61 on Thursday, falling to levels last seen in April 2026. At one point, shares had declined by 5.44% to $347.27. Despite the drop, Future Fund Managing Partner Gary Black viewed the reaction as an overreaction, pointing to CEO Hock Tan’s comments that AI chip demand exceeds shipping capabilities. The stock trades within a 52-week range of $289.96 to $495.00.

What the Numbers Show

The divergence between the stock price decline and the significant beat on AI revenue estimates suggests market focus on near-term valuation rather than operational execution. With Q3 AI revenue beating estimates by $800 million and FY26 guidance raised by $2 billion, the data indicates accelerating monetization of AI infrastructure demand. However, the explicit mention of supply constraints limiting the realization of even higher potential demand ($145bn+ in FY27) highlights a structural bottleneck that may temper immediate growth trajectories despite the massive order book.