Broadcom Inc. (NASDAQ:AVGO) reported record third-quarter results, with total revenue rising 86% year over year to $29.6 billion and AI semiconductor revenue surging 221% to $16.7 billion. Adjusted earnings were $3.32 per share, above the $3.24 consensus estimate from LSEG. The company also said it has line of sight to roughly $350 billion of artificial intelligence semiconductor revenue across fiscal 2027 and fiscal 2028. Despite the growth, the stock fell after Broadcom guided fourth-quarter consolidated gross margin to approximately 73%, down from 78% in the same quarter a year ago. The pressure reflects the increasing memory content of its XPUs, or custom AI accelerators, rather than weaker demand. Gross margin declined from 77.1% in the second quarter to 75% in the third quarter and is forecast near 73% in the fourth, representing 410 basis points of compression across two quarters. Rising DRAM and NAND prices are adding to the burden as suppliers prioritize high-bandwidth memory (HBM), which requires several times more wafer capacity per bit than ordinary DRAM. Broadcom is also monitoring shortages in leading-edge wafers, substrates and HBM memory, and is building additional substrate capacity in Singapore. The developments underscore how AI infrastructure depends on coordinated expansion across chips, memory, substrates, networking, optical components and power infrastructure.