Broadcom earnings up next: AI finale

Key takeaways

• Q3 results due 4 September; guidance is the swing factor
• The market reaction hinges on two levers: AI chips ramping and VMware subscriptions renewing
• Stellar 12-month share price performance and rich multiples: guidance and tone decide the next leg

Semis plus software, one flywheel

All eyes turn to Broadcom’s Q3 earnings on 4 September, one of the last big tech heavyweights to report this season. Broadcom runs on two engines: semiconductors and infrastructure software via VMware. The chips power hyperscaler networks and AI training. The software virtualises, manages, and secures private clouds. Before the numbers, a quick toolkit: accelerators, Ethernet, virtualization.

What to watch in the print

Last quarter revenue rose 20% to USD 15.0 billion. AI semiconductors grew 46% to over USD 4.4 billion. VMware delivered USD 6.6 billion, up 25%. Management guided Q3 revenue to USD 15.8 billion. Coverage skews positive: most analysts rate Broadcom Buy, with 12-month targets between USD 300-340. Shares have nearly doubled in the past year and trade near 37x next year’s earnings—so the bar is high.

This quarter is about mix, visibility, and credibility. Where does growth come from, how durable is it, and what does management signal for Q4 and into 2026?

• AI hardware mix
  Custom accelerators vs Ethernet networking. Look for order depth with hyperscalers, ramp timing, and any delivery bottlenecks. A healthy mix means accelerators scaling while Ethernet stays tight, not one spiking as the other fades.
  
  

• VMware subscriptions
  Migration to Cloud Foundation, renewal rates, and attach into networking/security. Billings and remaining performance obligations (RPO) show durability. Clean renewals with rising multi-product attach signal pricing power and lower churn risk.
  
  

• Margins and cash
  Semiconductor gross margin as accelerators scale, software margins holding, and free-cash-flow conversion. Stable cash against rising AI capex at customers suggests demand is real, not just pipeline noise.
  
  

• Guide and pipeline
  Q4 revenue guide, AI run-rate color, and 2026 demand signals. Credible bridges beat big promises. If management ties guidance to booked orders and delivery windows, the market will trust it more.
  
  

The possible scenarios

Guidance will be the swing factor

Markets price tomorrow, not yesterday. The print sets the baseline. The guide sets the path. Shares move on the gap between what investors expect and the route management lays out. Clear bridges, firm dates, and a clean mix beat big adjectives every time.

Recent results restated this simple rule: markets price the path, not the print. Alibaba showed it. Cloud and AI momentum beat softer profit. For more, see: Alibaba cloud and chips carry the load | Saxo. Apply the same lens here. If Broadcom ties revenue to contracted demand, gives delivery windows, and shows software cash compounding, investors lean in. If dates slip or mix is vague, expect multiple compression and near-term drawdown. Tone matters. Specifics beat superlatives.

Investor playbook

• AI hardware mix: accelerators vs Ethernet. Watch order depth, ramp dates, and delivery windows. Healthy = accelerators scale while Ethernet stays tight.
  
  
• VMware subscriptions: VCF migration, renewals, and attach into networking/security. Billings and RPO test durability.
  
  
• Margins and cash: semi gross margin as accelerators scale, software margins steady, FCF conversion vs working-capital swings.
  
  
• Guide and pipeline: Q4 bridge, AI run-rate, 2026 demand signals. Tie guidance to booked orders and dates.
  
  

Final take for investors

Broadcom’s story is simple to state and hard to execute: keep AI and VMware pulling in the same direction. Last quarter showed the formula—AI semiconductors and VMware subscriptions delivered double-digit growth. The main driver now is guidance credibility around AI demand breadth and execution on VMware conversion. Key risks are any slowdown in hyperscaler orders or friction in VMware renewals. The near-term catalyst is the 4 September call—numbers plus tone on AI mix and software cash dynamics will set the path. Chips must ship, software must stick—if the guide stitches them together, the rally gets its next lap.