Broadcom Inc.

(NASDAQ Global Select)
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Somewhat Bullish +45

Can Broadcom Stock Fall Further?

Financial outlook Guidance lowered Market commentary AI-generated analysis

πŸ“‰ Broadcom shares fell 20.5% in the three months to November 3, 2026, ending 30.8% below its June 2 high.

πŸ’° Revenue reached $89.1 billion for the four quarters ended August 2, 2026, up 48.7% year-over-year.

πŸ“ˆ Operating margins expanded to 48.5%, the widest level recorded since fiscal Q4 2016.

πŸ’Έ Total debt declined to $59.4 billion, representing only 3.8% of market value as of November 3, 2026.

πŸ€– Management secured supply to double AI revenue to approximately $115 billion for fiscal 2027.

⚠️ Current AI chip supply cannot fully meet customer demand, creating a potential bottleneck for growth.

πŸ“‰ Gross margins are expected to drop to about 73% in the fiscal fourth quarter due to custom accelerators with more memory.

πŸ’³ Broadcom closed a $35 billion financing tranche for Anthropic to help fund AI infrastructure build-outs.

βš–οΈ Management estimates contingent liabilities of about $29 billion on the first financing tranche but views them as low risk.

πŸ“… The fiscal fourth-quarter earnings report in December 2026 will be critical for validating margin guidance.

Bullish Signals
  • Broadcom generated $89.1 billion in revenue over the four quarters ended August 2, 2026, a significant 48.7% increase from the previous year.
  • The company achieved a 48.5% operating margin, marking the widest four-quarter operating margin posted since fiscal Q4 2016.
  • Total debt decreased to $59.4 billion, reducing leverage to just 3.8% of market value compared to 19.2% for the S&P 500.
  • Management secured sufficient supply to double AI revenue to approximately $115 billion in fiscal 2027 despite high demand.
  • Broadcom successfully closed a first $35 billion financing tranche for Anthropic to support AI infrastructure build-outs.
Risk Factors
  • Shares dropped 20.5% in the three months to November 3, 2026, falling 30.8% below its June 2 closing high.
  • Current supply levels cannot meet all customer demand for AI chips, potentially limiting immediate revenue growth.
  • Gross margins are expected to compress to about 73% in the fiscal fourth quarter due to custom accelerators with higher memory content.
  • Management faces contingent liabilities of approximately $29 billion related to residual value guarantees on the Anthropic financing tranche.
Full Analysis
Shares of Broadcom (AVGO) have experienced significant volatility, dropping 20.5% over the three months ending November 3, 2026, and falling below its June 2 closing high by 30.8%. This recent decline follows a pattern where the stock has endured 13 market shocks since 2009, with previous downturns often exceeding the broader S&P 500's performance during similar periods. Despite the recent price weakness, Broadcom reports robust underlying financial strength. The company generated $89.1 billion in revenue over the four quarters ended August 2, 2026, representing a 48.7% increase from the prior year. Operating margins expanded to 48.5%, marking the widest four-quarter margin posted since fiscal Q4 2016. Broadcom is actively managing its balance sheet and supply chain constraints in the AI sector. Total debt decreased to $59.4 billion, reducing leverage to just 3.8% of market value compared to nearly 19% for the S&P 500. However, management noted that demand for AI chips exceeds current supply capabilities, and gross margins are expected to compress to approximately 73% in the upcoming fiscal fourth quarter due to higher memory content in custom accelerators. The company is also expanding its role in financing AI infrastructure, having closed a $35 billion tranche for Anthropic. While this introduces contingent liabilities estimated around $29 billion for the first tranche, management views these risks as low. Investors are advised to monitor the December 2026 earnings report for confirmation of the guided gross margin trajectory.