Broadcom’s Earnings Test Comes With a Higher Bar After NVIDIA’s Blowout

Key Points

• Broadcom will report earnings on Sept. 2, with investors watching whether it can beat revenue, EPS, and AI chip sales estimates after NVIDIA's strong quarter.
• Whether Broadcom raises its FY2027 AI semiconductor revenue guidance above $100 billion, as some analyst estimates suggest is warranted, could heavily influence the stock's reaction.
• Investor concerns about Alphabet diversifying its custom chip business toward MediaTek and Marvell Technology could pressure Broadcom shares unless management addresses them.

NVIDIA NASDAQ: NVDA just blew the doors off with its latest earnings report. Shares soared 8.7% afterward, good for their largest single-day up move in over a year.

Now, all eyes turn to the world’s next biggest player in the AI semiconductor industry: Broadcom NASDAQ: AVGO.

The company will report earnings on Sept. 2 after the close, and markets are already signaling belief that the firm could have a strong quarter. Notably, Broadcom shares also rose about 4.5% after NVIDIA’s results, a move that is likely tied to the strong AI demand shown in Big Green’s earnings.

However, this by no means ensures that Broadcom’s earnings will receive a similar market reaction to NVIDIA’s. These are the factors that could determine the stock’s post-earnings fate.

Broadcom’s Headline Earnings Expectations

Beating estimates on revenue, earnings per share (EPS), and guidance for the following quarter will be key to the company impressing markets. Currently, Broadcom’s Q3 2026 sales estimate is $29.43 billion. This figure implies year-over-year (YOY) growth of slightly more than 84%, a large acceleration versus 48% growth last quarter.

At $3.22, the company’s EPS estimate implies growth of approximately 91% YOY, compared to 54% growth last quarter. Sales estimates for fiscal Q4 sit just below $35 billion, implying another acceleration to 94% YOY growth. Notably, Broadcom does not provide specific EPS guidance. However, the company guided for an adjusted earnings before interest, taxes, depreciation, and amortization margin of 68%. Markets will look for Broadcom to at least meet all of these figures and will likely not be satisfied without significant beats.

The most important underlying metric for Broadcom to meet or exceed is its AI semiconductor sales expectations. The company guided for $16 billion in AI chip sales, or 200% YOY growth. However, it is possible that actual market expectations are considerably higher than this.

To Raise or Not to Raise Guidance: Broadcom’s Big Decision

Outside of surpassing expectations on headline figures and underlying metrics, there is one key decision that could determine the market’s reaction to Broadcom’s results. Among the factors that could positively influence investor sentiment, Broadcom's raising its fiscal year 2027 (FY2027) AI semiconductor guidance ranks at the top.

The company is currently guiding for over $100 billion in AI semiconductor revenue in FY2027, a figure that it refused to raise last quarter. This was one of the key factors that caused Broadcom shares to drop nearly 20% in the two days following their last earnings report. Albeit this came as shares were trading very close to their all-time high.

There is strong reason to believe that Broadcom’s AI semiconductor guidance could rise well above $100 billion. Notably, Bernstein analyst Stacy Rasgon has estimated that Broadcom’s hyperscaler customers will deploy nine to 10 gigawatts (GW) of its chips in FY2027.

Rasgon also estimates that Broadcom’s content per GW is $20 billion. Together, these numbers would imply $180 billion to $200 billion in AI semiconductor revenue—massively higher than Broadcom’s current guidance. Even using more conservative estimates on content per GW would put AI chip revenue well above $100 billion.

Thus, markets were significantly disappointed that Broadcom did not raise its guidance last quarter, which hit shares particularly hard given their elevated level. However, this could have simply been a reflection of Broadcom’s often conservative stance when it comes to updating guidance. Seeing a substantial FY2027 guidance boost in its next report would likely go a long way in eliciting a positive market reaction.

Dispelling Alphabet Diversification Fears Could Benefit Broadcom

Another key factor that could help Broadcom stock is positive commentary around the relationship with its top AI customer, Alphabet NASDAQ: GOOGL. Broadcom shares have faced pressure due to the belief that MediaTek OTCMKTS: MDTKF, and more recently, Marvell Technology NASDAQ: MRVL, are taking share in Alphabet’s custom chip program.

However, the extent to which these relationships could impact Broadcom’s growth attributable to Alphabet is largely unknown. Broadcom providing commentary that signals the market is overreacting to these developments would also likely aid the stock’s post-earnings reaction. On the other hand, commentary that signals Broadcom is concerned about these developments could hurt the stock.

Analysts Point to Substantial 12-Month Upside in Broadcom as Earnings Near

Overall, it is highly difficult to predict whether Broadcom, or any company for that matter, will gain a positive market reaction after its earnings report. Still, investors can take some solace in the fact that over a 12-month forecast timeline, Wall Street analysts see the arrow for Broadcom stock pointing up. As Broadcom’s earnings report quickly approaches, the MarketBeat consensus price target sits near $492, a figure that implies considerable upside in the range of 30%.

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