◆ Inside the Latest Quarter (Q3 FY2026)

Broadcom (AVGO) — the variant view

AI revenue tripled in a year to $16.7 billion a quarter; one distributor now carries half the revenue, and Broadcom has committed $126.8 billion to its own suppliers.

📈 AVGO valuation, revenue & earnings — P/E, P/S, revenue, EPS →

Broadcom's third quarter of fiscal 2026, to 2 August, was the quarter the AI business stopped being a part of Broadcom and became most of it. Revenue rose 86% to $29.6 billion, and artificial-intelligence semiconductor revenue was $16.7 billion, up 221% on the year and 54% on the quarter before1. That is about four fifths of the chip segment's $20.8 billion2. For the fourth quarter management guides $21.7 billion of AI revenue and about $34.8 billion in total3.

Q3 FY2025 against Q3 FY2026 ($B)Q3 FY25Q3 FY26Semiconductors9.1720.84AI semiconductors5.2016.70Software6.798.75Free cash flow7.0213.67Broadcom Q3 FY2026 results release (Form 8-K exhibit 99.1)
Revenue rose 86% in a year; the chip business more than doubled and free cash flow nearly doubled with it.

The profit followed. GAAP operating income was $15,955 million against $5,887 million a year earlier, a 54% margin against 37%4. The semiconductor segment kept 61% of its revenue as operating profit and the software segment 84%5. Free cash flow was $13.7 billion, 46% of revenue6.

Two numbers in the 10-Q matter more than the headline. The first is the backlog: remaining performance obligations were $179.2 billion, including a long-term contract for custom AI accelerators signed in the quarter to May, and about a quarter of it is expected as revenue within twelve months7. At the end of fiscal 2025 the figure was $33.3 billion8. The second is concentration: one customer, a distributor, accounted for 50% of the quarter's revenue against 32% a year earlier, and the top five end customers for about 55%9. Broadcom has also committed $126.8 billion to its own suppliers, $73.0 billion of it for fiscal 202810.

Software was quieter and still good. Infrastructure software revenue rose 29% to $8,752 million, which the company attributes to demand for VMware Cloud Foundation, including additional licence revenue, and the segment's operating income rose 40%11. The growth came from licences: across the company, subscriptions and services revenue grew 11%12.

Outside AI, very little moved. Semiconductor revenue excluding AI was about $4.1 billion, as it has been in every quarter since the start of fiscal 202513.

Does the quarter change the moat? It deepens the part built on custom silicon and makes the company more dependent on it. Most of the growth now comes from a handful of programs whose owners also employ chip designers, and Broadcom has signed multi-year purchase commitments to match. The number that would change the verdict is fourth-quarter AI revenue against the $21.7 billion guided: a miss, with purchase commitments still above $120 billion, would mean the company had bought capacity ahead of orders that did not come.

References
  1. ReportedRevenue rose 86% to $29.6 billion, and artificial-intelligence semiconductor revenue was $16.7 billion, up 221% on the year and 54% on the quarter before.
    Broadcom Inc., Q3 FY2026 results (Form 8-K exhibit 99.1) - revenue $29,591M, up 86%; AI semiconductor revenue $16.7 billion, up 221% year over year and 54% quarter over quarter; Q4 FY2026 guidance of approximately $34.8 billion of revenue and $21.7 billion of AI semiconductor revenue (+236%); free cash flow $13,665M, 46% of revenue; semiconductor solutions revenue $20,839M and infrastructure software $8,752M — Quarter ended 2 August 2026 · publ. 2026-09-02 · source ↗
  2. Moat Explorer calcThat is about four fifths of the chip segment's $20.8 billion.
    Moat Explorer calculation from Broadcom's Q3 FY2026 release and 10-Q: semiconductor segment operating margin $12,770M / $20,839M = 61.3%; software $7,325M / $8,752M = 83.7%; AI share of semiconductor revenue $16.7B / $20.8B = about 80%; semiconductor revenue excluding AI $20.8B - $16.7B = about $4.1B, against about $4.0-4.2B in each quarter since Q1 FY2025; software segment operating income since the VMware close: FY2024 $13,977M + FY2025 $20,765M + nine months FY2026 $18,295M = $53,037M — FY2024 to Q3 FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Broadcom's Q3 FY2026 release, its Form 10-Q and the Forms 10-K; see the source line for each operand.
  3. ReportedFor the fourth quarter management guides $21.7 billion of AI revenue and about $34.8 billion in total.
    Broadcom Inc., Q3 FY2026 results (Form 8-K exhibit 99.1) - revenue $29,591M, up 86%; AI semiconductor revenue $16.7 billion, up 221% year over year and 54% quarter over quarter; Q4 FY2026 guidance of approximately $34.8 billion of revenue and $21.7 billion of AI semiconductor revenue (+236%); free cash flow $13,665M, 46% of revenue; semiconductor solutions revenue $20,839M and infrastructure software $8,752M — Quarter ended 2 August 2026 · publ. 2026-09-02 · source ↗
  4. ReportedGAAP operating income was $15,955 million against $5,887 million a year earlier, a 54% margin against 37%.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  5. Moat Explorer calcThe semiconductor segment kept 61% of its revenue as operating profit and the software segment 84%.
    Moat Explorer calculation from Broadcom's Q3 FY2026 release and 10-Q: semiconductor segment operating margin $12,770M / $20,839M = 61.3%; software $7,325M / $8,752M = 83.7%; AI share of semiconductor revenue $16.7B / $20.8B = about 80%; semiconductor revenue excluding AI $20.8B - $16.7B = about $4.1B, against about $4.0-4.2B in each quarter since Q1 FY2025; software segment operating income since the VMware close: FY2024 $13,977M + FY2025 $20,765M + nine months FY2026 $18,295M = $53,037M — FY2024 to Q3 FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Broadcom's Q3 FY2026 release, its Form 10-Q and the Forms 10-K; see the source line for each operand.
  6. ReportedFree cash flow was $13.7 billion, 46% of revenue.
    Broadcom Inc., Q3 FY2026 results (Form 8-K exhibit 99.1) - revenue $29,591M, up 86%; AI semiconductor revenue $16.7 billion, up 221% year over year and 54% quarter over quarter; Q4 FY2026 guidance of approximately $34.8 billion of revenue and $21.7 billion of AI semiconductor revenue (+236%); free cash flow $13,665M, 46% of revenue; semiconductor solutions revenue $20,839M and infrastructure software $8,752M — Quarter ended 2 August 2026 · publ. 2026-09-02 · source ↗
  7. ReportedThe first is the backlog: remaining performance obligations were $179.2 billion, including a long-term contract for custom AI accelerators signed in the quarter to May, and about a quarter of it is expected as revenue within twelve months.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  8. ReportedAt the end of fiscal 2025 the figure was $33.3 billion.
    Broadcom, Form 10-K FY2025 + earnings (rev ~$64B +24%; AI semiconductor revenue ~$20B +65%; ~$73B multi-year AI backlog; VMware segment growth) — FY2025 (ended Nov 2025) · publ. Dec 2025 · source ↗
  9. ReportedThe second is concentration: one customer, a distributor, accounted for 50% of the quarter's revenue against 32% a year earlier, and the top five end customers for about 55%.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  10. ReportedBroadcom has also committed $126.8 billion to its own suppliers, $73.0 billion of it for fiscal 2028.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  11. ReportedInfrastructure software revenue rose 29% to $8,752 million, which the company attributes to demand for VMware Cloud Foundation, including additional licence revenue, and the segment's operating income rose 40%.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  12. ReportedThe growth came from licences: across the company, subscriptions and services revenue grew 11%.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
  13. Moat Explorer calcSemiconductor revenue excluding AI was about $4.1 billion, as it has been in every quarter since the start of fiscal 2025.
    Moat Explorer calculation from Broadcom's Q3 FY2026 release and 10-Q: semiconductor segment operating margin $12,770M / $20,839M = 61.3%; software $7,325M / $8,752M = 83.7%; AI share of semiconductor revenue $16.7B / $20.8B = about 80%; semiconductor revenue excluding AI $20.8B - $16.7B = about $4.1B, against about $4.0-4.2B in each quarter since Q1 FY2025; software segment operating income since the VMware close: FY2024 $13,977M + FY2025 $20,765M + nine months FY2026 $18,295M = $53,037M — FY2024 to Q3 FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Broadcom's Q3 FY2026 release, its Form 10-Q and the Forms 10-K; see the source line for each operand.
Sources
Generated September 22, 2026