Broadcom shares have lagged the S&P 500 this year even as AI-chip demand continues to expand, according to the company’s recent performance. The silicon designer—known for application-specific integrated circuits—reported rapid growth in its most recent quarter, with AI-related semiconductor sales driving nearly half of that increase. Ahead of its fiscal 2026 third-quarter results on Sept. 2, investors are focused on whether Broadcom can translate that momentum into another strong forecast, using Nvidia’s latest results as a read-through for the broader AI supply chain.
Key takeaways
- Price move: Broadcom is up about 6% year to date, trailing the S&P 500 despite a strong recent run for parts of the AI semiconductor complex.
- Catalyst: The upcoming fiscal 2026 third-quarter earnings report on Sept. 2 is expected to shed light on AI semiconductor revenue growth.
- What’s driving the story: AI-focused demand and rising contribution from AI semiconductor sales have already accelerated Broadcom’s quarterly top line.
- Investor implication: Expectations are elevated for AI revenue to become a larger portion of the business, and investors may reward any beat or upward guide.
What drove the optimism around Broadcom
Broadcom has increasingly positioned itself as a leading supplier of ASICs used in AI and cloud workloads, an area that has grown rapidly alongside large language models. The report highlighted that AI chips support not only training and inference for LLMs, but also broader technology categories such as agentic AI, cloud computing, and physical AI applications like humanoid robotics and autonomous vehicles.
The growth narrative is rooted in recent results. Broadcom posted 48% year-over-year revenue growth in the second quarter, and the article said AI semiconductor sales drove almost half of that increase. That matters because it ties Broadcom’s acceleration directly to demand tied to AI infrastructure rather than to a purely cyclical mix of end markets.
Broadcom’s business model also differs from Nvidia’s. While Nvidia is associated with GPUs, Broadcom specializes in ASICs, which are tailored for specific workloads. The article argued that rising Nvidia demand is not necessarily a negative for Broadcom because ASICs and GPUs are not direct substitutes in every part of the AI stack.
The argument that the stock’s lag may be temporary
Despite Broadcom’s quarterly growth, the article pointed to why the stock may not have kept pace with the market. It said Broadcom has underperformed the S&P 500 this year, even as Nvidia’s year-to-date gains have moved ahead of the index. The key question for investors, in the context of that gap, is whether Broadcom’s AI revenue trajectory can catch up to the market’s expectations.
A major part of that debate centers on how investors interpret contributions from AI-related customers and partnerships. The article singled out Marvell Technology as a factor in Broadcom’s relative weakness, citing a partnership between Marvell and Alphabet that could shape how Alphabet sources AI semiconductors over the coming years. The concern raised is that successful partnership dynamics could reduce Alphabet’s reliance on Broadcom, depending on performance and long-term procurement strategies.
However, the article also noted that Broadcom’s own guidance suggests AI semiconductor demand is expanding quickly. From its Q2 results, Broadcom indicated that AI semiconductor revenue is expected to at least triple year over year in fiscal 2026 Q3. The article further said Broadcom expected consolidated revenue of $29.4 billion—an 84% year-over-year increase and a 32% sequential jump. Those projections imply customers are not slowing purchases, at least in the near term.
Why Nvidia’s latest results are being used as a benchmark
With Broadcom reporting on Sept. 2, the market’s immediate focus is likely to be AI semiconductor revenue. The article said Broadcom’s guidance calls for AI semiconductor revenue of $16 billion in the fiscal 2026 Q3 quarter, which would make up more than half of total revenue.
The reasoning is that as AI becomes a larger share of Broadcom’s mix, management’s ability to deliver growth should become easier to demonstrate—and potentially easier for investors to underwrite—if AI demand remains firm. Broadcom also “hasn’t tapped into as large of a market share yet,” the article argued, suggesting it may have more room to beat expectations than companies with larger installed bases and tougher comps.
To frame the expectations, the article pointed to Nvidia’s ability to exceed guidance. It said Nvidia generated $96.2 billion in fiscal 2027 Q2 versus guidance of $91 billion. It also noted Nvidia is targeting $108 billion in fiscal 2027 Q3 revenue, reinforcing that growth remains intact even after strong results. Broadcom, by contrast, is not being viewed as facing the same degree of difficulty in raising targets, according to the article’s logic.
Valuation is another element investors tend to watch when a company is positioned for cyclical or thematic outperformance. The article stated that Broadcom trades at a 20 forward price-to-earnings multiple, implying investors might have less pricing risk if results land above expectations and management offers constructive commentary.
Bigger picture: what to watch into the Sept. 2 report
Broadcom’s next earnings release will likely determine whether the market’s skepticism about its year-to-date underperformance is justified or simply a timing issue relative to broader AI sentiment. Investors will probably focus on whether AI semiconductor revenue follows through on management’s accelerated-growth narrative, as well as whether consolidated results confirm the scale implied by prior guidance.
Beyond the numbers, the key near-term question is whether management can sustain the mix shift toward AI-related demand. With Broadcom’s report scheduled for Sept. 2, traders and long-term investors will also be watching for any additional signals on customer spending patterns and supply chain capacity that could influence guidance for subsequent quarters.
