When I wrote my pre-earnings breakdown on Broadcom (NASDAQ: AVGO), I was willing to hold the stock because the numbers had already convinced me that its AI opportunity was translating into serious cash, but I wanted to see whether the company’s Q3 report could keep pushing that thesis forward rather than simply giving Wall Street another estimate beat. Now we have the answer.
Broadcom posted $29.59 billion in Q3 revenue, beating the $29.47 billion consensus estimate, while non-GAAP EPS came in at $3.32, above the $3.22 expected by analysts.
The number I was watching before the report was $16 billion. Broadcom had told investors to expect $16 billion in AI semiconductor revenue. It delivered $16.7 billion.
And now the company expects $21.7 billion in Q4. So, where does this leave the argument I made before earnings? More importantly, what happens when a company keeps raising the ceiling faster than investors can reset their expectations?
Broadcom’s AI semiconductor business has moved from a promising growth engine into the part of the company that can change how investors value the entire operation, and Q3 gives us a good reason to take that shift seriously.
The company generated $16.7 billion from AI semiconductors, up 221% year over year and 54% from Q2. The $10.8 billion AI semiconductor business I was looking at before earnings has become a much larger piece of Broadcom’s earnings machine in one quarter.
Custom accelerators and AI networking sit at the center of that growth. Broadcom says demand for both remains strong, and Q4 AI semiconductor revenue should reach $21.7 billion.
I was looking for evidence that hyperscaler spending could keep climbing without dragging Broadcom’s economics down. The company has now shown that demand can rise while the cash generation keeps pace. Now let’s see how much of this AI spending actually reaches shareholders
In Q2 2026, Broadcom generated $10.26 billion in free cash flow after just $231 million in capital expenditures, which helped explain why I was comfortable holding AVGO into a report where expectations had become difficult to ignore.
In Q3 the company pushed that number to $13.67 billion, with operating cash flow reaching $14.2 billion against $0.5 billion in capital expenditures. Free cash flow still represented 46% of revenue.
Investors have chased the companies selling chips, building data centers, supplying power and providing software. The common thread has been enormous future spending. Broadcom gives investors exposure to that spending while retaining a huge amount of the economics as cash.
The company ended Q3 with $24 billion in cash, paid a $0.65 dividend, and continued returning capital while the business expanded. So what happens if the AI infrastructure cycle lasts longer than the market expects?
Broadcom raised its Q4 AI semiconductor revenue expectation to $21.7 billion, up 236% year over year, while setting total Q4 revenue guidance at $34.8 billion.
The market once believed custom AI accelerators would become a major business. Then it had to believe hyperscalers would keep spending. Now Broadcom has to prove that these customers will continue to increase their deployments.
That creates a different kind of risk for investors. Broadcom lists customer concentration, semiconductor cyclicality, supply-chain dependence and changes in the timing or volume of significant customer orders among the risks facing the business.
At the same time, the company has more than one source of revenue. Q3 semiconductor solutions revenue reached $20.84 billion, while infrastructure software contributed $8.75 billion. Infrastructure software also grew 29% year over year. That gives the company a second engine beneath the AI surge, which makes the earnings profile less dependent on one product cycle than the headline AI numbers suggest. Now look at what the stock has done with all of this.
AVGO Stock Faces Technical Resistance Despite Strong Fundamentals
AVGO closed around $361.83 on September 4, sitting below its 20-day moving average at $378.52, 50-day average at $383.74 and 200-day average at $369.85. Volume reached 349.64K shares on the session shown.
The June peak near $495 hangs above the stock, while the descending trendline from that high has capped the recovery toward the low $400s. The recent move back toward the mid-$300s also puts AVGO below its 200-day average, leaving investors to decide whether this pullback represents a valuation reset or the beginning of something worse.
I know which side I’m on.
Why I’m Still Bullish on AVGO After Earnings
The pre-earnings decision was simple. Broadcom had enough cash generation and AI demand to hold through the print without turning the position into an earnings gamble. Q3 strengthened that decision.
The business has shown that rising AI demand can flow through Broadcom’s custom silicon and networking business and emerge as real cash. That is why I remain bullish on AVGO. Owning that kind of business through volatility rather than trying to predict which earnings report will produce the perfect entry…makes more sense to me.
