Broadcom (NASDAQ: AVGO) is delivering some of the most explosive revenue growth in the semiconductor sector, yet its stock continues to trade at a surprising discount to peers.
The company’s fiscal 2026 third-quarter results, covering the three months ended August 2, showed total revenue surging 86% year over year to $29.6 billion.
AI chip revenue was the standout driver, jumping an extraordinary 221% year over year to $16.7 billion during the quarter.
Non-GAAP earnings nearly doubled year over year to $3.32 per share, reflecting the strong demand for Broadcom’s custom AI chips and networking processors.
Broadcom makes application-specific integrated circuits, known as ASICs, and networking components that are in heavy demand across AI data centers worldwide.
Despite those results, the stock fell after the report because Wall Street had expected fiscal Q4 revenue guidance of $35.1 billion, while Broadcom guided for $34.8 billion.
That relatively minor shortfall has created what many analysts may come to view as a compelling buying opportunity in one of AI infrastructure’s most important suppliers.
Broadcom’s own projections point to AI revenue reaching $57.6 billion for the full fiscal 2026 year, representing a 186% increase from the prior year.
The company then estimates AI revenue will double in fiscal 2027 to $115 billion, before jumping again to $230 billion in fiscal 2028, with management confirming it has secured enough supply to meet that outlook.
Broadcom management also stated on the latest earnings call that the company is confident it will exceed $30.00 in earnings per share in fiscal 2028, compared to anticipated earnings of $11.64 per share in fiscal 2026, a 70% increase.
The broader AI infrastructure environment strongly supports Broadcom’s growth trajectory, with Nvidia noting that the combined capital expenditure of the top five hyperscalers is poised to reach $800 billion in 2026.
Nvidia further projected that hyperscaler capex could climb to $1.3 trillion in 2027, with overall AI capital spending potentially reaching $3 trillion to $4 trillion by 2030.
The PHLX Semiconductor Sector index has risen 97% over the past year, making Broadcom’s flat performance during that same stretch appear particularly out of step with sector fundamentals.
Broadcom currently trades at just 20 times forward earnings, a notable discount considering the pace of growth the company is sustaining across its AI product lines.
If Broadcom achieves at least $30.00 in EPS in fiscal 2028 and trades at 30 times earnings, a discount to the Nasdaq-100’s earnings multiple of 34, the stock could reach $900 per share.
That scenario would represent a potential gain of approximately 149% from current levels, making the valuation case difficult to ignore for long-term growth investors.
Broadcom generated $35.9 billion in AI revenue across the first nine months of fiscal 2026 alone, underscoring just how rapidly this segment of its business has scaled.
For investors building long-term portfolios, the combination of a discounted valuation and a clearly defined multi-year AI revenue growth path makes AVGO a stock worth examining closely right now.
