Broadcom $AVGO reported Q3 FY26 results, 56% of the company is now AI, chip business fell to 14% of revenue.

Q3 FY2026:

- Revenue $29.6 billion (+86% year-over-year)

- AI chips $16.7 billion (+221% year-over-year)

- FCF margin 46%

- Q4 guidance: 34.8 billion (+93% year-over-year)

Despite the beat, the stock fell over 5%, the market now wants only flawless acceleration.

How I evaluate the results in depth:

- Buybacks: $0. Broadcom instead repaid $7.1 billion in debt, cash rose to $24 billion, the opposite of what debt-laden Nvidia $NVDA does

- Margin declining due to HBM memory - same bottleneck as Nvidia, now confirmed elsewhere too

- New largest customer is Anthropic, then OpenAI. Broadcom thus bears more risk from non-profit AI labs, less from hyperscalers like Google $GOOG

Valuation: $347, forward P/E 38×. Expensive for the near term, but if the EPS target of $30 in FY2028 is met, today's price = only 11.6× forward P/E. So today's bet is on the future. I would see a price with margin of safety around the $270-300 range.