Why Broadcom’s AI Forecast Can Rise While Its Stock Falls
$Broadcom(AVGO)$ has supplied extraordinary evidence that custom accelerators and networking are becoming a second major branch of the AI-chip market. Yet AVGO fell after the results because a great business result can still disappoint a stock carrying demanding expectations.
Broadcom reported on September 2 for its fiscal third quarter ended August 2. Revenue rose 86% to $29.59 billion, GAAP operating income reached $15.96 billion and free cash flow was $13.67 billion, or 46% of revenue. AI semiconductor revenue increased 221% to $16.7 billion. Management expects that figure to reach $21.7 billion in the fourth quarter and guided total quarterly revenue to approximately $34.8 billion. Broadcom’s official results provide the reporting date, period and reconciliations.
The bullish thesis is broader than one chip. Hyperscalers want custom accelerators for workloads that justify specialised silicon, while the clusters still require Broadcom’s networking and connectivity products. Management increased its fiscal-2027 AI-chip revenue forecast to about $115 billion from more than $100 billion and projected roughly $230 billion for fiscal 2028. It also disclosed more than $30 billion of recent AI-chip bookings. Reuters’ September 2 report provides that management commentary.
The bearish case is concentration and capital-cycle risk. A small number of hyperscalers control enormous orders and are capable of shifting chip designs between suppliers. Marvell’s recent custom-chip win with Google shows that Broadcom does not own the market. The forecasts also depend on customers continuing to fund infrastructure at a pace that has already triggered investor questions about utilisation and returns.
$Broadcom(AVGO)$ fell 2.74% on September 3 to $357.16 after trading between $342.33 and $359.40 on almost 60 million shares, more than twice the preceding session’s volume. The recovery from the low shows some demand, but the close remained below the pre-report price of $367.24. Support is visible around $342 to $350 and then $335; resistance lies at $367 to $376 and approximately $392 to $400. The daily price history supports a post-results breakdown followed by an intraday rebound, not a confirmed recovery.
If AVGO rebounds toward $367 to $376 but closes back below $367, an illustrative 30 to 45 DTE bear call spread could pair a short $400 call with a long $410 call, provided the live short-call delta magnitude is no greater than about 0.15 and the credit is adequate. Maximum loss per standard spread is $1,000 minus the credit. A sustained close above $400 would invalidate the technical premise.
The operating evidence leans bullish, but the near-term stock evidence is neutral until AVGO recaptures the pre-report range. The view would turn bearish if AI bookings weaken, a major customer shifts designs elsewhere or $342 fails on heavy volume. This is personal opinion for education, not financial advice or an instruction to enter a trade.
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