Broadcom Sees $115B in FY27 AI Revenue, Stock Drops 5% on Margin
Broadcom reported fiscal third-quarter results after Wednesday's close, and the news was less the quarter itself than the outlook management put behind it. Revenue came in at $29.59B with adjusted EPS of $3.32 against a $3.30 estimate, while AI semiconductor revenue rose 221% year over year to $16.7B and accounted for 56% of the company total. CEO Hock Tan said that line should reach $21.7B in the fourth quarter, close fiscal 2026 at $58B, and then run to roughly $115B in fiscal 2027 and roughly $230B in fiscal 2028. He named the commitments behind those numbers: tens of billions of dollars a year from Google for TPUs, 5 to 10 gigawatts with Anthropic, and more than 1.3 gigawatts of custom accelerators with OpenAI.
The market went the other way. The stock fell 5% after hours and is down 3.6% premarket, trading 25% below its June peak of $495. The mechanism is margin. Gross margin fell 210 basis points sequentially in the third quarter, and fourth-quarter guidance calls for about 73%, down from 78% a year earlier. The part of Broadcom that is growing is custom XPU design, and that work carries a lower margin than the legacy semiconductor and software business — revenue compounds while profitability thins. The second issue is concentration: AI revenue rests on six XPU customers, with four driving most of the demand, and Google's separate TPU agreement with Marvell in mid-August is a reminder of how much sits with any one of them.
Apple faces a £2B ($2.7B) class action filed Thursday at London's Competition Appeal Tribunal. Ann Pope, a former senior official at Britain's Competition and Markets Authority, brought the claim on behalf of app developers, alleging applied its App Tracking Transparency rules more strictly to third-party developers than to its own advertising business. says the rules are a privacy protection that gives users control over cross-app tracking. Germany's competition authority recently required to change how developers use personal data for targeted ads, and investigations are open in France, Italy and Poland.
