Always On Architecture Question
Can I use Server3 to host the AG groups of Server1 and Server2.


Your scenario is possible. AG1 and AG2 should be different availability groups. Also, all the 3 servers should be part of same Windows cluster.

The only problem that I can see is if server3 goes down (for whatever reason, blue screen, disk failure, or any disaster) then you will loose DR for server1 and server2 both at the same time. Also, server3 when a failover occurs from both server1 and server2 should be powerful to support the load interms of CPU, DiskIO and Memory.