Broadcom’s Real Test Is 2027, Not Tonight’s Print

Broadcom Inc. (NASDAQ: AVGO) reports fiscal third-quarter results after the close today, and the setup is unusual. The numbers will almost certainly be enormous. Yet the stock sits roughly 25% below its 52-week high of $495.00, trading near $369.72 with a market cap around $1.76 trillion. In other words, investors have already decided that enormous is the baseline. What they want now is proof that the custom-silicon cycle runs deep into 2027 and beyond.

Key Points

• Broadcom (AVGO) reports fiscal Q3 2026 after the close on Wednesday, Sept. 2.
• Morgan Stanley maintains an Overweight rating and models revenue of $29.4 billion, up 84.3% year over year.
• AI revenue is modeled at $16.0 billion — $10.8 billion in custom ASICs and $5.2 billion in AI networking.
• That $16 billion is management’s own prior guidance, so it functions as a floor rather than a surprise.
• The stock trades roughly 25% below its 52-week high despite Street forecasts for approximately 70% earnings growth this year and next.
• The number that matters most is fiscal 2027 AI revenue, where the buy side is reaching well past the sell side.

The quarter itself looks close to settled

Morgan Stanley’s July-quarter model sits roughly in line with consensus. The firm looks for $29.4 billion in revenue, up 84.3% year over year and 32.5% sequentially. It models a 74.0% gross margin against a Street figure of 73.5%, and EPS of $3.24 versus consensus of $3.22.

Notably, the AI line carries no built-in cushion. Morgan Stanley models $16.0 billion in AI revenue, up 48% sequentially, split between $10.8 billion of custom ASIC sales and $5.2 billion of AI networking. However, CEO Hock Tan already guided the Street to precisely that $16 billion figure last quarter, after AI semiconductor revenue grew 143% year over year to $10.8 billion in fiscal Q2. Hitting the number therefore clears nothing. Missing it would break something.

Real upside, if it appears, lives in the October-quarter guide. Morgan Stanley models $34.8 billion in revenue there, up 93.4% year over year, with AI revenue accelerating another 32% sequentially to $21.2 billion.

The 2027 gap is where the volatility lives

Management has pointed to fiscal 2027 AI revenue comfortably north of $100 billion and has signaled that growth should persist into 2028. Morgan Stanley models $120 billion. Meanwhile, parts of the buy side have quietly anchored on more than $150 billion.

That $30 billion spread explains why a stock compounding earnings at roughly 70% has still given back a quarter of its value since June. As Morgan Stanley put it in a note previewing the print, “The main risk into the print is expectations rather than fundamentals.”

Why smaller AI-infrastructure names should watch this

Broadcom is the clearest public read on custom accelerators — the ASIC path hyperscalers take when they want an alternative to merchant GPUs — and on the networking silicon that stitches those clusters together. Consequently, tonight’s October-quarter guide functions as a demand signal for the entire tier below it: optical interconnect, advanced packaging, power delivery, thermal management, and the memory supply chain that Nvidia’s Jensen Huang has already flagged as the binding constraint on growth.

If Broadcom guides AI revenue toward $21 billion for the October quarter, the capital-expenditure wave has further to run and smaller suppliers inherit that visibility. If the company hedges on 2027, expect the repricing to hit hardest where liquidity is thinnest.