Episode Details

Broadcom (AVGO) Q3 FY2026 — It is down 5.1% since the print - the second quarter running that a beat has been sold. Broadcom beat on revenue and on earnings, and guided Q4 revenue ABOVE consensus - and the stock still fell. The answer is four lines below the headline: adjusted gross margin went from 78.35% to 74.99%, and the Q4 guide implies about 72.03%. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$367.10 vs ~$348.39 today. KEY METRICS: - Revenue $29,591M, +85.5% YoY - about $350M above consensus - Adjusted EPS $3.32 vs $3.22 expected; adjusted operating income $20,095M - Adjusted gross margin 74.99%, down from 78.35% a year ago - Q4 guide ~$34,800M revenue (above consensus) at ~66% operating margin - That implies ~72.03% gross margin - a 6.32 point fall in twelve months - Incremental operating margin in the guide 55.15% vs the 67.91% just earned - Free cash flow $13,665M (46.2% of revenue); no buyback; net debt $35.4bn What to watch: the Q4 release in December - does adjusted operating margin hold 66%, and does cost of revenue stop outgrowing revenue Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.