Key HighlightsAI semiconductor sales reached a record $16.7 billion in Broadcom’s Q3 2026, representing a 221% year-over-year increase.Shares have retreated approximately 26% from the June peak of $480.77.CEO Hock Tan projects AI revenue will climb to $115 billion in 2027, then double to $230 billion by 2028.The company collaborated with Apollo and Blackstone on a massive $35 billion infrastructure financing initiative supporting over 20 gigawatts of computing power.Analysts maintain a Strong Buy consensus with an average target price of $521.41, suggesting approximately 41% potential upside.Trading near $367, Broadcom’s shares have declined roughly 26% from the June closing peak of $480.77. This decline occurred despite the company delivering exceptional quarterly results.Broadcom Inc., AVGOThe company reported total Q3 2026 revenue of $29.6 billion, representing an 86% year-over-year jump. AI semiconductor sales exploded 221% to $16.7 billion, with custom accelerators representing approximately 73% of this segment.The Semiconductor Solutions division saw revenue soar 127% to $20.84 billion, making up 70% of overall sales. Meanwhile, Infrastructure Software revenue grew 29% to $8.75 billion, fueled by VMware private-cloud platform adoption.Adjusted earnings per share nearly doubled, reaching $3.32. The company generated $13.7 billion in free cash flow, representing 46% of revenue.Expanding AI Revenue TrajectoryLooking ahead to Q4, Broadcom provided guidance for total revenue of $34.8 billion, marking a 93% increase. AI semiconductor revenue is projected to reach $21.7 billion, up 236%. Leadership now anticipates approximately $58 billion in AI semiconductor revenue for the complete fiscal year.During remarks at the Goldman Sachs Communacopia and Technology Conference, CEO Hock Tan outlined projections showing AI revenue could hit $115 billion in 2027 before doubling to $230 billion in 2028. He emphasized that infrastructure availability—not customer demand—represents the primary constraint on these projections.Power infrastructure has emerged as a critical limitation. Tan highlighted electricity access, transformer supply, permitting processes, and construction schedules as major factors restricting the speed at which AI data centers can become operational.The company collaborates with six frontier-model developers on custom XPU chip solutions. Its customer roster includes Google, OpenAI, and Anthropic. Broadcom secured a long-term supply agreement with Google extending through 2031 for TPUs and networking solutions. The company also committed to providing OpenAI with 10 gigawatts of custom silicon capacity, delivering the Jalapeño ASIC sample within a nine-month timeframe.AI chip order bookings surpassed $30 billion in the most recent quarter. Committed deployment agreements include over 10 gigawatts for Anthropic, five gigawatts for OpenAI, and three gigawatts for Meta.Valuation Metrics and Wall Street OutlookShares currently trade at approximately 31.7x fiscal 2026 consensus earnings per share of $11.64. Should consensus EPS reach $19.39 in fiscal 2027 as anticipated, the forward multiple would decline to roughly 19x based on current pricing.Management expects free cash flow to reach the mid-$40 billion range in 2027. CEO Tan indicated the board may consider increasing dividends or share buybacks during December discussions.From a technical perspective, AVGO trades slightly below its 200-day moving average of $369.97. The RSI registers at 46.14, indicating neutral-to-slightly bearish momentum. Critical support exists around the $358 level.Citigroup maintained its Buy rating while lifting its price target to $515 on September 4. Macquarie upgraded AVGO to Outperform with a $490 price target on September 3. DA Davidson maintained a Neutral rating with a $350 target.The Street consensus remains Strong Buy, reflecting 26 Buy ratings and three Hold ratings. The average analyst price target sits at $521.41.During Wednesday’s premarket trading, AVGO declined 0.03% to $368.46.The post Broadcom (AVGO) Drops 26% Despite Record $16.7B AI Revenue Milestone appeared first on Blockonomi.