Broadcom shares face uncertainty amid AI chip concerns

The company’s revenue has seen substantial growth. Broadcom reported Q3 FY2026 revenue of $29.6 billion, an 86% increase year-over-year (YoY). AI semiconductor revenue reached $16.7 billion, up 221% YoY and 54% sequentially. Looking ahead, the company anticipates Q4 FY2026 revenue of $34.8 billion and AI semiconductor revenue of $21.7 billion, representing a 236% YoY jump.

“Q3 demand was simply hot, and we’re just getting started,” stated Broadcom CEO Hock Tan during a recent call with analysts. He also projected, “In 2027, we have secured the supply to again double AI revenue to approximately $115 billion.”

Broadcom’s valuation currently stands at 19x forward earnings, which is lower than Advanced Micro Devices (NASDAQ:AMD) at 42x. Economist Will Denyer of Gavekal U.S. suggested that data center projects could be relocated to more accommodating regions if regulations become restrictive.

The company’s reliance on a limited number of hyperscale data centers, which are now facing political scrutiny, poses a risk. Hock Tan highlighted that “land, power and shell are major constraints and dictate timing” for AI data center deployment.

Analysts predict Broadcom’s earnings per share will grow 67% in fiscal 2027, a lower rate than AMD’s projected 110% growth. The company’s Q4 outlook indicates a gross margin of 73%, down from 78% a year earlier, due to the increasing prevalence of memory-heavy custom accelerators.

Comparing Broadcom’s performance to its peers, NVIDIA (NASDAQ:NVDA) is down 22% over the past month to $187.43, AMD is down 31% to $445.98, and Marvell Technology (NASDAQ:MRVL) has experienced the steepest decline, down 52% to $138.53.

Broadcom’s next earnings report in December will be a key indicator of whether the company can meet its AI semiconductor guidance. Investors are weighing the potential for continued AI growth against political risks and margin pressures.