Broadcom Q3 FY2026: $29.6B revenue and GAAP EPS at 81% of non-GAAP

Broadcom designs the custom AI accelerators and networking chips that a handful of hyperscalers use to wire their data centres together, and — since the $69 billion VMware deal — it also sells the infrastructure software those data centres run on. In the quarter ended 2 August it sold $29,591 million of the two combined, up 86% on the year, beat both consensus lines, and guided the next quarter to $34.8 billion.

That is a very large number growing very fast, and most of this cohort’s earnings write-ups would stop there and pivot to the gap between the headline profit and the GAAP one. Broadcom is the quarter where that pivot points the other way. The interesting number here is the small one: the distance between what the company earned under GAAP and the figure the market quotes is narrower than at almost any other name in the AI-chip trade, and it is narrowing.

The results

	Q3 FY2026	Consensus	Q3 FY2025
Revenue	$29,591M	~$29.47B	$15,952M
Non-GAAP EPS	$3.32	~$3.22	$1.69
GAAP diluted EPS	$2.68	—	$0.85
GAAP operating margin	53.9%	—	36.9%
Non-GAAP operating margin	67.9%	—	65.5%

Revenue grew 85.5% year over year and 33.4% sequentially from the $22,187 million of the second quarter. Non-GAAP EPS of $3.32 was up 96% on the year and cleared the roughly $3.22 the Street carried; revenue cleared the ~$29.47 billion consensus by about 0.4%. On the reported numbers and the written guidance, this is a beat and a raise — management guided the fourth quarter to $34.8 billion, up 93% year over year and another ~18% sequentially, at a non-GAAP operating margin of about 66%.

Did Broadcom beat its own guidance in Q3 FY2026?

Yes. Revenue of $29,591 million came in above the approximately $29.4 billion Broadcom guided to in its June 3, 2026 8-K, and non-GAAP operating income of $20,095 million was 67.9% of revenue (our arithmetic), above the guided ~67%. AI semiconductor revenue of $16.7 billion, a management figure, also topped the $16.0 billion CEO Hock Tan forecast in that release. Year over year, revenue rose 86%, non-GAAP operating income 92% and GAAP diluted EPS 215%, as reported in the September 2 release. The June release also guided Adjusted EBITDA to about 68% of revenue; the Q3 release does not report Adjusted EBITDA, so that line cannot be checked from the filing.

Where the revenue comes from

Segment	Q3 FY2026	Share	YoY
Semiconductor solutions	$20,839M	70%	+127%
Infrastructure software	$8,752M	30%	+29%
Total	$29,591M	100%	+86%

The two segments are growing at very different speeds. Semiconductor solutions — the AI accelerators, networking silicon and connectivity chips — more than doubled, up 127%. Infrastructure software, which is largely VMware, grew 29% off a base that is now mostly converted to subscription. The mix has swung hard back toward silicon: a year ago the two segments were 57%/43%; today it is 70%/30%.

Inside the semiconductor line sits the number management leads with. CEO Hock Tan put AI semiconductor revenue at $16.7 billion, up 221% year over year and 54% sequentially — that is 56% of the entire company and roughly 80% of the semiconductor segment, leaving about $4.1 billion of non-AI semiconductor revenue (wireless, broadband, storage, industrial) that is barely growing. And the guide leans harder still: management expects AI semiconductor revenue to reach $21.7 billion in the fourth quarter, up 236%. Nearly the whole growth story of an $188 billion-asset company now rests on custom accelerators sold to a small number of cloud customers. That is the strength and the concentration to hold in view at the same time.

The distinctive number: GAAP profit that is mostly real

Broadcom reports two bottom lines like everyone else, but they are unusually close together.

	Q3 FY2026
GAAP net income	$13,088M
GAAP diluted EPS	$2.68
Non-GAAP net income	$16,372M
Non-GAAP diluted EPS	$3.32

The non-GAAP EPS the headline uses is only 24% above the GAAP figure — put the other way, GAAP EPS is 81% of the non-GAAP one. Set that beside the other names in this trade: at Marvell the non-GAAP EPS was nearly three times the GAAP number, and at CrowdStrike the entire non-GAAP profit was smaller than the stock compensation added back to create it. Broadcom converts its AI revenue into GAAP dollars, and then into cash, at a rate the rest of the cohort does not.

Here is the whole bridge between the two, which foots exactly:

GAAP → non-GAAP net income	Q3 FY2026
GAAP net income	$13,088M
+ Amortisation of acquired intangibles	$2,006M
+ Stock-based compensation	$2,019M
+ Restructuring and other	$115M
+ Loss on debt extinguishment	$75M
− Non-GAAP tax adjustments	−$931M
Non-GAAP net income	$16,372M

Two things about this bridge matter. First, the two largest add-backs are nearly equal — $2,019 million of stock-based compensation and $2,006 million of acquired-intangible amortisation — and together they are almost the whole gap. The amortisation is a non-cash accounting charge that runs off the VMware and prior acquisitions and declines over time (intangible assets on the balance sheet fell from $32.3 billion to $26.3 billion in nine months); treating that as “not an ongoing operating cost” is the standard and defensible half of a non-GAAP adjustment.

Second — and this is the fact that separates Broadcom from its peers — stock-based compensation actually fell. Total SBC was $2,019 million, down 13% from $2,322 million a year ago, while revenue grew 86%. As a share of revenue it dropped from 14.6% to 6.8%. Where Marvell’s stock comp was growing three times faster than sales and CrowdStrike’s ran at 27% of revenue, Broadcom’s shrank in absolute dollars during its biggest growth quarter. Diluted shares rose only modestly, from 4,860 million to 4,887 million, up 0.6%. The dilution dial, the thing that quietly erodes per-share returns at most high-growth chip and software names, is turned down here.

Operating leverage is the engine

The reason GAAP profit grew even faster than revenue is that the cost base barely moved.

	Q3 FY2026	Q3 FY2025	Change
Revenue	$29,591M	$15,952M	+86%
GAAP gross margin	$20,456M	$10,703M	+91%
Total GAAP operating expenses	$4,501M	$4,816M	−7%
GAAP operating income	$15,955M	$5,887M	+171%
GAAP net income	$13,088M	$4,140M	+216%

Revenue rose 86% while total GAAP operating expenses fell 7% — R&D declined from $3,050 million to $2,895 million and SG&A from $1,072 million to $996 million. Almost every incremental dollar of gross profit dropped to operating income, which is why operating income grew 171% against 86% revenue growth, and the GAAP operating margin jumped from 36.9% to 53.9%. Net income then grew 216%, faster still, helped by a lower GAAP effective tax rate (14.3% this quarter against 21.7% a year ago) — a genuine tailwind, but a more volatile one than the operating leverage above it, and worth separating out.

Non-GAAP operating margin reached 67.9%, up from 65.5%, and the company guided to hold ~66% next quarter even as revenue steps up to $34.8 billion. That is the shape of a business with enormous fixed-cost absorption: the software carries near-100% incremental margins and the custom-silicon volume is now large enough to spread R&D thin.

The cash and the balance sheet

The margin story shows up as cash. Broadcom generated $14,197 million of operating cash flow and, after just $532 million of capital expenditure, $13,665 million of free cash flow — a 46% free-cash-flow margin. That is the number least sensitive to any accounting lens, and it is enormous.

	2 Aug 2026
Cash and equivalents	$23,975M
Short-term + long-term debt	$59,419M
Goodwill	$97,801M
Intangible assets, net	$26,325M
Free cash flow (quarter)	$13,665M

The balance sheet still carries the VMware deal. Total debt is $59.4 billion, so net debt is about $35.4 billion — but against $13.7 billion of quarterly free cash flow that is under two-thirds of a year’s cash generation, and the company paid down long-term debt (from $62.0 billion to $57.2 billion since the fiscal year began) while interest expense edged down to $778 million. Goodwill of $97.8 billion is 52% of the company’s $188.1 billion of total assets — the accounting residue of buying growth rather than building all of it — and it is the item to keep half an eye on, because it is the thing that would take a writedown if any acquired business ever disappointed. The dividend was $0.65 a share, $3.1 billion paid in the quarter.

Two working-capital lines moved the wrong way and are worth flagging: trade receivables rose 92% since the start of the fiscal year, to $13.7 billion, and consumed $2.9 billion of cash in the quarter, and inventory nearly doubled to $4.5 billion. Some of that is building product ahead of the $34.8 billion fourth-quarter ramp; some of it is revenue that has been booked but not yet collected. Neither is alarming on its own against 86% revenue growth, but both are the kind of line that widens quietly before it matters.

The bear case, stated fairly

Not “the profit is an illusion” — it plainly is not; the GAAP number is most of the story here. The narrower version:

1. The concentration is extreme and getting more so. AI semiconductor revenue is 56% of the company and guided to grow into a larger share still, and it sits with a small number of custom-accelerator customers — each of which is both a partner and an organisation capable of designing more of its own silicon over time. The growth is real and it is narrow.
2. The guidance sets a very high bar. A $34.8 billion guide is 93% year-over-year growth and another 18% sequentially; the AI-semi piece has to reach $21.7 billion for it to land. Beats get harder to repeat when the comparison base is itself a record and the guide is this steep.
3. Goodwill is over half the balance sheet. $97.8 billion of goodwill against $99.7 billion of equity means the book value is largely acquisition accounting; a stumble in any acquired franchise shows up as an impairment.
4. Working capital is absorbing cash. Receivables up 92% and inventory up ~100% since the fiscal-year start are the counterweight to the 46% free-cash-flow margin — worth watching that collection keeps pace with booking.

None of that is refuted by the quarter. It is the price of admission to a business compounding AI revenue at triple digits.

The bull case

Also on the page, and stronger than the bear case this quarter. Revenue grew 86% to a record; AI semiconductor revenue grew 221% and is guided to accelerate; the GAAP operating margin expanded seventeen points to 53.9% while operating expenses actually fell. Unlike most of the cohort, the profit is real under GAAP — $2.68 of GAAP EPS, 81% of the non-GAAP figure — and stock-based compensation declined in absolute dollars, so the per-share return is not being quietly diluted away. Free cash flow was $13.7 billion at a 46% margin, the debt from VMware is being paid down out of that cash, and the software segment gives the company a large, high-margin, recurring base that the pure-silicon names do not have.

What to check at the Q4 report

• Revenue against the $34.8 billion guide, and whether AI semiconductor revenue reaches the $21.7 billion management pointed to — that single line is now the swing factor for the whole company.
• Non-GAAP operating margin against ~66% — whether the operating leverage holds as the mix tilts further toward silicon, which carries lower gross margin than software.
• Stock-based compensation against $2,019 million and 6.8% of revenue — whether the absolute decline continues or was a one-quarter step-down. This is the number that keeps Broadcom’s GAAP and non-GAAP profit close.
• Goodwill and intangibles — any impairment, and the pace at which the $26.3 billion of intangibles amortises down and shrinks the GAAP/non-GAAP gap further.
• Trade receivables and inventory — whether the 92% and ~100% increases since the fiscal-year start reverse as the quarter’s revenue collects, or keep building.
• Debt paydown and interest expense — whether free cash flow keeps retiring the VMware debt on schedule.

The read

Broadcom reported a record quarter, a clean beat on both lines, and a guide that calls for near-doubling again next quarter — and unlike most of the AI-chip cohort, the profit behind the headline is largely real. GAAP EPS of $2.68 is 81% of the $3.32 the market quotes, stock compensation fell 13% in absolute dollars during an 86% growth quarter, and the business converted its revenue into $13.7 billion of free cash flow at a 46% margin. The gap between reported and adjusted profit — the thing that is the whole debate at Marvell and CrowdStrike — is the smallest in the group here, and narrowing. What you are left holding is not an accounting question but a concentration one: more than half the company is now AI silicon sold to a handful of customers, and the guide asks that line to grow faster still. For anyone holding AVGO, the two numbers that matter next quarter are AI semiconductor revenue — does it hit the $21.7 billion the company promised — and stock-based compensation as a share of revenue — does the discipline that keeps this profit real hold as the business scales. The first tells you the demand is intact. The second tells you how much of it reaches the owner.

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Sources and method. Company figures — revenue of $29,591 million against $15,952 million a year ago and $22,187 million in the prior quarter; semiconductor-solutions revenue of $20,839 million and infrastructure-software revenue of $8,752 million; GAAP total cost of revenue of $9,135 million, gross margin of $20,456 million, research and development of $2,895 million, selling, general and administrative of $996 million, amortisation of acquisition-related intangibles of $507 million in operating expense (and $1,499 million in cost of revenue), total operating expenses of $4,501 million, operating income of $15,955 million, interest expense of $778 million, other income of $98 million, a $2,187 million tax provision, net income of $13,088 million and diluted EPS of $2.68 on 4,887 million diluted shares (against 4,860 million a year earlier); the non-GAAP reconciliation — total stock-based compensation of $2,019 million (against $2,322 million a year ago), total acquired-intangible amortisation of $2,006 million, restructuring and other of $115 million, loss on debt extinguishment of $75 million, non-GAAP tax adjustments of $931 million, non-GAAP gross margin of $22,191 million, non-GAAP operating income of $20,095 million, non-GAAP net income of $16,372 million and non-GAAP diluted EPS of $3.32 on 4,937 million non-GAAP diluted shares; operating cash flow of $14,197 million, capital expenditure of $532 million and free cash flow of $13,665 million; cash and equivalents of $23,975 million, short-term debt of $2,252 million, long-term debt of $57,167 million, goodwill of $97,801 million, intangible assets of $26,325 million, trade receivables of $13,707 million and inventory of $4,523 million at 2 August 2026 (against $16,178 million, $3,152 million, $61,984 million, $97,801 million, $32,273 million, $7,145 million and $2,270 million at 2 November 2025); the $0.65 dividend totalling $3.1 billion; and the fourth-quarter guidance of revenue of approximately $34.8 billion and non-GAAP operating income of approximately 66% of revenue — are Broadcom’s own disclosures in Exhibit 99.1 to the Form 8-K filed 2026-09-02 for the quarter ended 2026-08-02, read directly from the filing on SEC EDGAR and linked above. The AI semiconductor revenue figures ($16.7 billion for Q3, up 221% and 54% sequentially; $21.7 billion guided for Q4, up 236%) are management statements attributed in the same release to CEO Hock Tan; Amie Thuener is identified as chief financial officer there.

Not company figures, and attributed accordingly: the Q3 consensus estimates of roughly $29.47 billion of revenue and about $3.22 of non-GAAP EPS — the Zacks consensus reported in the previews cited above. This piece makes no claim about the share-price reaction. Separately from those estimates, whether the quarter beat or missed is judged against the company’s own previously issued guidance (Form 8-K, Exhibit 99.1, filed 2026-06-03: revenue of approximately $29.4 billion, non-GAAP operating income of approximately 67% of revenue, Adjusted EBITDA of approximately 68% of revenue, and AI semiconductor revenue of $16.0 billion per CEO Hock Tan) and against the year-ago quarter.

Our arithmetic, labelled as such: the 85.5% year-over-year and 33.4% sequential revenue growth; the segment mix shift from 57%/43% to 70%/30%; AI semiconductor revenue at ~56% of total and ~80% of the semiconductor segment and the ~$4.1 billion of implied non-AI semiconductor revenue; the 24% premium of non-GAAP over GAAP EPS and GAAP EPS at 81% of non-GAAP; stock-based compensation at 6.8% of revenue (down from 14.6%) and down 13% in dollars; the 0.6% rise in diluted shares; the 171% and 216% growth in operating and net income against 86% revenue growth; the 53.9%, 67.9% and 46% margins; the 14.3% versus 21.7% GAAP effective tax rates; net debt of about $35.4 billion and goodwill at 52% of total assets; and the ~18% sequential and 93% year-over-year growth implied by the Q4 guide. These are approximations built on the disclosed dollars, not reported figures. The interpretation — that Broadcom’s defining feature this quarter is how little daylight there is between its GAAP and non-GAAP profit, and that the risk has shifted from accounting quality to customer concentration — is our analysis, not a company statement, and is not a forecast.

Related: NVIDIA Q2 FY2027, the other end of the AI-accelerator market and the merchant-GPU alternative to Broadcom’s custom silicon; Marvell Q2 FY2027, the other custom-silicon franchise chasing the same hyperscaler dollars, where the GAAP-to-non-GAAP gap runs the opposite way; AMD Q2 2026 on the merchant-silicon competition; and Cisco Q4 FY2026 for the incumbent side of AI networking and infrastructure.

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