Key TakeawaysFiscal Q3 revenue jumped 86% year-over-year to $29.59 billion, surpassing analyst expectations of $29.43 billionAI-related chip sales exploded 221% to reach $16.7 billion, with Q4 projections pointing to $21.7 billion (236% year-over-year increase)Company elevated its FY2027 AI revenue target to $115 billion and maintained FY2028 expectations at $230 billionFourth-quarter revenue forecast of $34.8 billion fell short of the $35 billion Street consensus, triggering the selloffShares declined approximately 2.2% in Thursday’s premarket session; Wall Street consensus remains Strong Buy with $505.38 average targetBroadcom (AVGO) delivered impressive fiscal third-quarter results on Wednesday evening, yet investors reacted negatively to the report. Shares dropped roughly 2.2% in Thursday’s premarket session after experiencing volatile after-hours trading Wednesday.Broadcom Inc., AVGOThe core financial metrics looked impressive. Third-quarter revenue reached $29.59 billion, marking an 86% surge from the prior year and exceeding Wall Street’s $29.43 billion projection. Adjusted earnings per share of $3.32 topped forecasts ranging from $3.22 to $3.24, while nearly doubling last year’s $1.69 figure.BROADCOM $AVGO Q3’26 EARNINGS HIGHLIGHTS Revenue: $29.6B (Est. $29.36B) ; +86% YoY Adj. EPS: $3.32 (Est. $3.24) ; +96% YoY AI Semiconductor Revenue: $16.7B; +221% YoY Non-GAAP Oper Income: $20.1B (Est. $19.73B) ; +92% YoYQ4 Guide: Revenue: ~$34.8B (Est.… pic.twitter.com/diJXwYmaNs— Wall St Engine (@wallstengine) September 2, 2026The artificial intelligence segment delivered exceptional performance. AI chip sales skyrocketed 221% compared to last year, hitting $16.7 billion and surpassing both internal projections and analyst estimates. Management forecasts this metric will reach $21.7 billion next quarter, representing 236% annual growth.Company Elevates Multi-Year AI Revenue ProjectionsManagement also upgraded its extended timeline forecasts. The semiconductor giant now anticipates $115 billion in AI chip sales for fiscal 2027, an increase from its previous target exceeding $100 billion. Looking further ahead, the company projects this figure will approximately double to $230 billion by fiscal 2028.Chief Executive Hock Tan indicated that current customer demand is exceeding the company’s manufacturing and supply chain capabilities, lending credibility to these ambitious targets.During the previous quarter, Broadcom maintained its FY2027 AI forecast at $100 billion, which triggered a significant stock decline. This time, even the increased outlook failed to prevent investor selling.The Culprit Behind Thursday’s DeclineThe problem centered on fourth-quarter projections. Management expects revenue of $34.8 billion, representing 93% year-over-year growth, yet falling marginally below the approximately $35 billion Wall Street consensus. Additionally, adjusted operating margin guidance of 66% came in slightly under the anticipated 66.5%.This modest shortfall proved sufficient to eclipse the impressive AI performance.The stock is also burdened by recent headwinds. AVGO has retreated approximately 26% from its June all-time peak. A quarterly disclosure revealed the company potentially faces up to $29 billion in lease commitments associated with a data center investment fund established by Apollo and Blackstone, raising questions about underlying demand dynamics.Additionally, in August, Google entered an agreement with Marvell to develop chips for portions of its AI infrastructure. While Broadcom renewed its TPU partnership with Google in April, Marvell’s new role in handling additional chip design work reduces a potential revenue stream for Broadcom.The company creates customized AI accelerator chips for Google Cloud, Meta Platforms, and OpenAI. Google represents its largest and longest-standing client.For the year, AVGO has gained 6.5%. Mizuho’s Vijay Rakesh maintained his Buy recommendation and $530 price objective following the earnings release, forecasting AI revenue reaching $129 billion in FY2027 and $235 billion in FY2028. TipRanks shows the average analyst price target at $505.38, suggesting 37.6% potential upside.Wall Street’s consensus stands at Strong Buy, comprising 23 Buy recommendations and three Hold ratings.The company’s forward price-to-earnings ratio of 18.8x sits marginally above the S&P 500 average, a significant contrast to the premium valuation it commanded earlier in the year.The post Broadcom (AVGO) Stock Dips 2% Despite Massive 221% AI Revenue Growth in Q3 Earnings appeared first on Blockonomi.