Broadcom Inc (NASDAQ: AVGO) shares fell 3.1% in premarket trading after the company reported a fiscal third-quarter earnings beat but issued fourth-quarter revenue guidance that missed Wall Street expectations.

CEO Hock Tan stated that customer demand significantly outpaces current supply capabilities, though deployment is constrained by land, power, shell availability, and high-bandwidth memory shortages.

Q3 Results and Q4 Guidance

Broadcom reported Q3 revenue of $29.59 billion, surpassing the $29.36 billion estimate. Adjusted earnings per share came in at $3.32, beating the $3.24 consensus. AI semiconductor revenue for the quarter reached $16.7 billion, growing 221% year-over-year and 54% quarter-over-quarter.

However, the company guided for Q4 revenue of approximately $34.8 billion, falling short of the $35.03 billion estimate.

The stock closed at $367.24 on Wednesday, down 0.66%, before sliding further in extended trading. By Thursday premarket, shares were trading at $355.89, representing a 3.1% drop.

Supply Chain and Deployment Bottlenecks

Tan emphasized that while customers want Broadcom to ship more chips, the company is being conservative with its outlook due to multidimensional supply constraints. He noted that Broadcom expects AI revenue to double to $115 billion in fiscal 2027 and double again to $230 billion in fiscal 2028.

Key bottlenecks identified by management include:

• Land, power, and shell (LPS) availability for data center deployments.
• High-Bandwidth Memory (HBM) constraints, which Broadcom does not supply but customers must secure.
• System memory requirements for AI servers.

Tan stated that these factors dictate the specific timing of capacity deployment. "We have secured supply and we think it’s the right number to put it to 115," Tan said, adding that Broadcom would uplift guidance if circumstances change.

Market Reaction and Technical Setup

Technically, Broadcom faces headwinds. The stock trades 7.7% below its 20-day simple moving average and 7.6% below its 50-day SMA. It is also 10.8% below its 100-day SMA and 3.9% below its 200-day SMA. Although the stock formed a golden cross in April when the 50-day SMA crossed above the 200-day SMA, it has since fallen back below the longer-term level.

Resistance stands near $407.50, while support sits around the psychologically important $350 level. The MACD remains below its signal line with a negative histogram, indicating weakening momentum.

Analyst Views: Strong Results, Soft Outlook

Bernstein analyst Stacy Rasgon described the underlying Q3 results as "very, very good," noting that semiconductor revenue slightly exceeded expectations. Infrastructure software revenue missed estimates, but Rasgon characterized the shortfall as minor.

Gross margin reached 75%, approximately one percentage point above Wall Street’s estimate. However, Rasgon called the Q4 guidance "in-lineish," noting that the operating margin outlook was about 50 basis points below expectations, potentially due to higher memory prices.

Gary Black, Managing Partner at The Future Fund LLC, noted on X that the stock fell nearly 4% premarket after the Q3 beat but soft Q4 guidance. "As the AI Rev strength becomes clearer to investors I expect the stock to recover somewhat," Black wrote.

Analyst Price Target Revisions

Despite the soft guidance, several analysts increased their price targets following the earnings announcement:

Financing and Competition

CEO Hock Tan highlighted financing arrangements with Apollo Global Management (NYSE: APO) and Blackstone Inc. (NYSE: BX) to support key AI customers Anthropic and OpenAI. A $35 billion first tranche has been closed for Anthropic’s initial 1-gigawatt deployment.

Tan stated that only two of Broadcom’s six major AI chip customers need financing. He projected that Anthropic could overtake Alphabet Inc (NASDAQ: GOOGL)’s Google as Broadcom’s largest custom AI chip customer in 2027.

Competition remains a concern, with investors questioning potential loss of business to rivals like MediaTek Inc. Rasgon acknowledged this risk but argued the AI market is large enough to support multiple suppliers, including NVIDIA Corp (NASDAQ: NVDA), Advanced Micro Devices Inc (NASDAQ: AMD), and Qualcomm Inc (NASDAQ: QCOM).

ETF Exposure

Broadcom holds significant weight in major tech and semiconductor ETFs:

• Invesco PHLX Semiconductor ETF (NASDAQ: SOXQ): 9.94%
• iShares Expanded Tech Sector ETF (NYSEARCA: IGM): 8.49%
• iShares Semiconductor ETF (NASDAQ: SOXX): 8.12%
• SPDR S&P 500 ETF Trust (NYSE: SPY): 2.65%
• Invesco QQQ Trust (NASDAQ: QQQ): 2.80%

These large weightings mean flows into or out of these funds can influence the stock price.

What the Numbers Show

The divergence between the strong Q3 operational performance (beating EPS and revenue estimates with expanded gross margins) and the negative market reaction highlights investor sensitivity to forward guidance. While current execution remains robust, the miss on Q4 revenue and operating margin expectations suggests near-term pressure from rising input costs or demand normalization. The market is effectively pricing in a higher bar for future AI growth, requiring management to not only meet but exceed the previously stated $100 billion AI revenue target to restore confidence.

Broadcom Inc (NASDAQ: AVGO) reported a 221% year-over-year surge in AI semiconductor revenue to $16.7 billion for fiscal Q3. CEO Hock Tan claimed the company’s custom chip for OpenAI outperforms Nvidia’s Grace Blackwell at half the cost.

Total Q3 revenue of $29.59 billion beat estimates of $29.36 billion, with adjusted EPS of $3.32 topping expectations of $3.24. Despite the beat, shares fell after hours on softer-than-expected Q4 guidance.

Competitive Edge Against Nvidia

Tan highlighted “Jalapeno,” OpenAI’s first-generation custom accelerator built by Broadcom. He stated that Jalapeno “outperforms the Grace Blackwell Ultra in performance per watt, latency, throughput, and power” for inference workloads.

Pointing to the economic advantage of specialized hardware, Tan noted that a chip optimized for specific large language models will “outperform any GPU” and can do so “at half the cost of a GPU.”

Customer and Deployment Outlook

Broadcom outlined significant growth trajectories for its custom AI chip business, stating that Anthropic is on track to become the company's largest XPU customer in 2027 and sustain that position in 2028.

Regarding OpenAI's infrastructure, the company noted that the Jalapeno project is on track for the planned deployment of 1.3 gigawatts in 2027. Management indicated there is line of sight for OpenAI to deploy over 5 gigawatts of Jalapeno and its successor generation of XPU.

Google and Anthropic Expansion

During the earnings call, Tan announced that Broadcom has started production shipments of Google’s next-generation TPU v8i, following high-volume deliveries of its Ironwood TPU v7 to both Google and Anthropic. The new TPU v8i features more memory and bandwidth than Ironwood and is optimized for AI inference workloads.

Broadcom recently expanded its long-term agreement with Google to develop and supply future generations of TPUs and AI networking products. Under this agreement, Broadcom expects to deliver "multi-tens of billions of dollars" worth of TPUs annually over the next several years. Tan stated that demand in 2028 and 2029 will be met through successive generations of increasingly sophisticated TPUs developed with Google.

Anthropic represents another major growth vector. Broadcom is deploying 1 gigawatt of Ironwood capacity for Anthropic in 2026. The company expects Anthropic to deploy another 5 gigawatts of TPU v8i in 2027, with an additional 10 gigawatts of potential deployments in 2028.

Financial Performance and Guidance

Broadcom’s AI semiconductor revenue is expected to accelerate further to $21.7 billion in the fourth quarter, representing a 236% year-over-year increase. For the full fiscal year 2026, the company projects AI revenue to reach $58 billion.

Looking ahead, Tan mapped out an aggressive growth trajectory, projecting AI semiconductor revenue to double to approximately $115 billion in fiscal 2027 and double again to $230 billion in 2028.

For the fourth quarter, Broadcom expects total revenue of approximately $34.8 billion, which is slightly below analysts’ estimate of $35.03 billion. This weaker-than-expected outlook pressured the stock in after-hours trading.

Shares closed at $367.24, down 0.66% on Wednesday, and fell another 0.82% to $364.23 in after-hours trading. Jim Cramer dubbed the print an “overtime save” as the market digested the historic surge in custom AI chip demand despite the soft guidance.

What the Numbers Show

The disclosure reveals a concentrated dependency on hyperscale AI customers for future revenue growth. With Anthropic projected to be the largest single customer by 2027 and OpenAI targeting multi-gigawatt deployments, Broadcom's XPU business expansion is heavily tied to the capital expenditure cycles of these entities. The simultaneous ramp of Google’s TPU v8i and Anthropic’s massive capacity additions indicates that Broadcom’s custom silicon strategy is successfully diversifying beyond a single client, reducing reliance on any one partner despite the high concentration risk inherent in the sector.