Broadcom Lifts AI Forecast to $115B; Shares Fall — SkimNews
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- Broadcom reported Q3 FY2026 revenue of $29.59 billion, up 86% year-over-year, with non-GAAP EPS climbing 96% to $3.32 in what the analyst called one of the strongest quarters in company history.
- Broadcom is guiding for $115 billion in FY2027 AI semiconductor revenue, backed by secured supply, hyperscaler deployments, and robust infrastructure software margins.
- Broadcom shares declined post-earnings despite the beat and raised outlook, with the analyst maintaining a Buy rating, a $470 price target, and a 37% implied upside.
- Gross margin pressure is expected to persist due to XPU mix and memory content, though operating leverage and software profitability are positioned to cushion earnings.
- Broadcom's XPV financing introduces customer credit risk, with current free cash flow prioritized for debt reduction over buybacks, supporting a conservative base case.
Why it matters: Even a quarter with 86% revenue growth and a sharply higher FY2027 AI revenue guide couldn't lift the stock, suggesting Broadcom's bar from hyperscaler customers and AI infrastructure bulls is now priced into the ~$470 target zone. Margin compression from XPU mix and emerging XPV financing risk are the two second-order concerns doing the selling.
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