Broadcom (NASDAQ: AVGO) has had a rough year on Wall Street, with shares falling 31% from their all-time high and down 4% since the beginning of 2026. The latest setback came Friday, when Intel‘s disappointing fourth-quarter guidance triggered a broad sell-off in semiconductor stocks.
But there’s an interesting disconnect between Broadcom’s stock performance and its actual business results. And I think investors should be paying attention.
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Back in August, I argued that Broadcom could be a compelling buy if its fiscal third-quarter earnings showed $16 billion in artificial intelligence (AI) semiconductor revenue, followed by guidance for continued growth.
Well, the results are in. And Broadcom delivered.
Broadcom’s AI business is firing on all cylinders
Broadcom reported $16.7 billion in AI semiconductor revenue for its fiscal third quarter, beating management’s $16 billion target. That represented a whopping 221% increase from a year ago and 54% growth from the previous quarter.
And the outlook was even better.
CEO Hock Tan projected AI semiconductor revenue of $21.7 billion in the fourth quarter, representing 236% year-over-year growth. Overall, Broadcom reported third-quarter revenue of $29.6 billion, up 86%, and generated $13.7 billion in free cash flow. Those are outstanding numbers, particularly for a company whose stock has struggled this year.
One of my concerns in August was whether Broadcom’s relationship with Alphabet could be threatened by Google’s expanding partnership with Marvell Technology. Broadcom helps design Google’s custom Tensor Processing Units (TPUs), which offer an alternative to Nvidia‘s more versatile graphics processing units.
The Marvell agreement raised questions about whether Broadcom could lose business. But the third-quarter results and fourth-quarter guidance suggest demand for Broadcom’s custom AI accelerators and networking products remains exceptionally strong.
That doesn’t eliminate the competitive risk. It does, however, make it much harder to defend the argument that Broadcom’s growth is already faltering.
Is Broadcom stock a buy?
At 28.3 times forward earnings, Broadcom isn’t exactly a bargain-bin stock. Investors are still paying a premium for its growth prospects, and any slowdown in AI infrastructure spending could put additional pressure on shares.
