The semiconductor behemoth, following its latest quarterly results, delivered an unprecedented long-range outlook, formally projecting $230 billion in AI chip revenue for fiscal 2028 and vowing earnings per share will surpass $30 by then. This figure not only dwarfed Wall Street's earlier estimates but also compelled several top investment banks to disregard near-term softness, pivot their focus to the long horizon, and unanimously reaffirm their buy ratings.

During the 3QFY26 earnings call for the period ending July 2026, management elevated the FY27 AI revenue guidance from 'over $100 billion' to $115 billion, and for the first time, crystallized a FY28 target of $230 billion—corresponding to roughly 20GW of data center deployments—while also projecting non-GAAP EPS above $30 for that year. In the wake of the announcement, heavyweights like Goldman Sachs, HSBC, and Jefferies all sustained their buy calls, with price targets of $540, $560, and $550 respectively, each implying over 50% upside from the current share price of $367.24.

Yet, the immediate results themselves were hardly electrifying. Revenue for 3QFY26 hit $29.6 billion, broadly in line with consensus; the 4QFY26 revenue guide of $34.8 billion came in below both HSBC's and Goldman's projections, and the operating margin outlook also trailed market forecasts. The real catalyst driving the repricing of expectations lies in a profound shift in the client base—Anthropic and OpenAI are stepping in to replace Alphabet (Google) as Broadcom's largest AI chip buyers, and this diversification is substantially mitigating long-standing fears about over-reliance on a single customer.

Steady Current Performance, But a Cautious Q4 Projection

Broadcom's 3QFY26 revenue of $29.6 billion was essentially aligned with both its own guidance of $29.4 billion and the consensus of $29.5 billion. Within that, AI revenue soared 221% year-over-year to $16.7 billion, outperforming the guided $16 billion by about 4%; the semiconductor solutions arm contributed $20.8 billion, and infrastructure software added $8.8 billion, each matching expectations. Adjusted non-GAAP EPS of $3.32 also topped the consensus figure of $3.24.

The 4QFY26 sales projection of $34.8 billion, however, lagged Goldman's $36.2 billion and HSBC's $37.3 billion estimates, landing only roughly in line with the $35.2 billion consensus. The adjusted operating margin guide of 66% sits below Goldman's 67.5% and the market's 66.8%. Margin pressure stems from the escalating mix of custom ASICs and the cost drag from HBM memory components shipped alongside XPU products—the 4QFY26 gross margin outlook of approximately 73% marks a decline of about 200 basis points from 3QFY26's 75%.

According to Goldman's analysis, despite short-term margin compression, management anticipates that fixed-cost operating leverage will sustain stable operating margins amid rapid revenue growth, expecting that operational leverage will offset part of the gross margin dilution.

Upward Revision for FY27, FY28 Target Blows Past Street Estimates

What genuinely energized the market is the substantial upgrade to the medium- and long-term outlook. The full-year FY26 AI revenue forecast was raised from $56 billion to $58 billion; the FY27 figure was lifted to $115 billion, up from the prior 'over $100 billion' language, though still shy of HSBC's $140.4 billion and Goldman's previous $133 billion.

More groundbreaking is the maiden FY28 guidance—$230 billion in AI revenue, tied to about 20GW of deployments. That number towers over HSBC's prior $201 billion, the consensus of $174.5 billion, and Goldman's earlier $192.9 billion. Concurrently, the FY28 non-GAAP EPS guide of over $30 exceeds HSBC's $28.77 and the market's $26.23.

Per Goldman's research note, management stated that critical supply chain components for FY27 and FY28 are already locked in, with the primary constraint now being the readiness of data center land, power, and facility construction, rather than any demand or supply shortages. This suggests that as infrastructure bottlenecks gradually ease, actual revenues could surpass the provided guidance.

The Rise of Anthropic and OpenAI Reshapes the Client Landscape

Another pivotal aspect of this release is the notable restructuring of Broadcom's customer base. Historically, the ASIC business leaned heavily on Alphabet (Google)'s TPU orders, and this concentration risk was a persistent market concern. Now, management has for the first time explicitly disclosed that Anthropic will become Broadcom's largest XPU customer in FY27, with OpenAI climbing to the second spot in FY28, pushing Alphabet (Google) down to third.

Breaking down the specifics: Anthropic will deploy 1GW of Ironwood (TPU v8i) this year, add 5GW in FY27, and a further 10GW in FY28; OpenAI's Jalapeño custom XPU began volume production shipments in 3QFY26, with 1.3GW planned for FY27 expanding to over 5GW in FY28, while a third-generation XPU is in development; Meta's MTIA custom accelerators will commence volume production from 4QFY26, with Broadcom expecting cumulative deployments of 3GW by 2028. According to HSBC research, the potential pipeline from these non-Google clients totals roughly 18GW, which, at about $10 billion per GW, translates to approximately $180 billion in non-Google ASIC revenue.

Still, Alphabet (Google) is far from exiting. Broadcom has inked a long-term agreement covering future TPU generations' development and supply, alongside AI networking infrastructure collaboration. Management indicated that Alphabet (Google)'s annual TPU procurement will remain at the 'tens of billions of dollars' level for several years. Broadcom already began high-volume shipments of Ironwood TPU v7 to Alphabet (Google) in 3QFY26 and has initiated volume shipments of TPU v8i.

AI Networking and Supply Chain Expansion Advance in Tandem

Beyond AI chips, Broadcom's AI networking business is viewed as another key growth engine. Management expects AI networking revenue to grow at the same pace as XPU revenue over the coming years. The company has already launched the industry's first 100Tb/s Ethernet switch, Tomahawk 6, and completed the tape-out of the world's first 200Tb/s switch, Tomahawk 7. Concurrently, Broadcom is aggressively scaling capacity for EML lasers, VCSELs, and continuous-wave lasers—each product line's capacity is doubling this year, with plans for further expansion over the next two years to address demand outstripping industry supply.

On the supply chain front, Broadcom's Singapore substrate packaging plant is slated to begin production in FY27 to alleviate substrate bottlenecks. Management noted that beyond substrates, leading-edge silicon wafers, HBM, and system memory are also potential deployment constraints, and the company is collaborating with supply chain partners to resolve these issues.

Multiple Banks Raise Forecasts, Keeping Buy Ratings

Confronted with this blend of near-term volatility and long-term surprise, Wall Street's major institutions have maintained a uniformly optimistic stance.

Per Goldman's research, the bank lifted its 12-month price target from $525 to $540, based on 30 times FY27 normalized EPS of $18, reiterating a buy, while sharply raising its FY28 EPS estimate from $28.85 to $34.25 and boosting its FY28 AI revenue projection from $192.9 billion to $240.3 billion.

HSBC trimmed its target from $600 to $560, reflecting 3% and 7% cuts to FY26 and FY27 AI revenue forecasts, but retained a buy rating grounded on a 28 times FY27 P/E, implying about 53% upside. HSBC analyst Frank Lee argued that the robust ASIC ramp and upside in AI networking revenue are sufficient to support convergence toward the target multiple.

According to Jefferies research, the firm kept its buy rating and $550 target, based on 20 times CY28 EPS of $27.21, while raising its FY27 revenue forecast by roughly 9%. Jefferies pointed out that the official $230 billion FY28 guidance was the single largest positive surprise of the release, but cautioned that with expectations for the next eight quarters now fairly clear, the room for 'value discovery' in the stock has narrowed; gross margin dilution, driven by higher XPU mix and increased memory content, will remain a persistent overhang and a key point of market debate.