Broadcom's Earnings Report Could Send Stock Soaring

Broadcom's fortunes may change after Sept. 2 when it releases its fiscal 2026 third-quarter results. The chip designer is expected to report $29.4 billion in revenue, an 84% spike from the year-ago period. Analysts forecast a 92% increase in Broadcom's earnings per share to $3.24.

The optical networking market is growing rapidly, with Goldman Sachs predicting it will jump from $15 billion in 2026 to $154 billion in 2028. Broadcom sells multiple optical networking components, including co-packaged optics (CPO) products, which are in high demand.

The company's management notes that 40% of its AI chip revenue comes from networking products, but expects this mix to drop to 30% as sales of custom AI processors increase. Broadcom anticipates $56 billion in AI chip revenue in 2026, meaning its networking business could generate around $17 billion in revenue.

Broadcom's cheap valuation, trading at just 19 times forward earnings, makes it an attractive buy. The stock is cheaper than the tech-focused Nasdaq-100 index's forward earnings multiple of 24. For a company expected to clock 70% earnings growth this year and next, buying Broadcom at its current price seems like a no-brainer.