Broadcom reports fiscal third-quarter earnings after Wednesday's close, and the numbers are expected to hinge on AI chips. The company's own guidance calls for $29.4 billion in revenue, slightly above the $29.241 billion analysts have penciled in, with adjusted EPS pegged at $3.215. The stock, trading at $370.34, is up 4% from last week's low but still 23% below its June 2 record.
AI Chips Take Center Stage
AI chips are projected to bring in $16 billion of Q3 sales, or 54% of the total, up from 49% last quarter. That includes OpenAI's first custom processor, a key piece of the growth story. Broadcom expects to keep a 67-cent profit for every dollar of sales, the same as last quarter, while revenue jumps 84% year over year.
The company has beaten its own guidance for eight straight quarters, but this time analysts are forecasting below the company's number. That's a rare setup, and it puts extra weight on the actual print and what management says about the current quarter.
Wall Street's Mixed Signals
Wall Street rates Broadcom a Strong Buy, with 25 buy ratings, 3 holds, and no sells. But the data tells a more complicated story. TipRanks shows AVGO has topped estimates every quarter since 2024, yet the stock fell the next day four times, with an average move of 10.53% and a range from -13.01% to +22.71%. So beating expectations hasn't always meant a rally.
Sentiment is bullish on the surface: blogger sentiment sits at 83% bullish and news sentiment at 0.89 out of 1. But the best-performing investors have been trimming exposure, cutting Broadcom by 2.37% over the last 30 days and 3.06% in the past week. That divergence between retail chatter and big-money behavior is worth watching.
Chart and Money Flow Point to Caution
The technical picture is mixed. Chaikin Money Flow is negative on 10 of 14 major chip names, and the five worst all build AI accelerators. AVGO ranks last at -0.225, meaning money is flowing out even as the stock bounces. The shares have been in a descending channel since June 3, though buying volume improved on August 27.
Key levels are clear: confirmation needs a daily close above $376.28, then $398.34. On the downside, failure below $356.62 opens $344.46, and a break of $334.62 exposes $324.79. Broadcom is up 7% this year, far behind the PHLX Semiconductor Index's 63% gain.
What to Watch After the Print
The earnings release lands after the bell, and the market's reaction will hinge on whether Broadcom can beat its own guidance again and how the AI chip pipeline looks for the rest of the year. The stock's next move will likely be decided by whether it can close above $376.28 or slips below $356.62 in the sessions that follow.
