Broadcom Inc. (AVGO) Earnings

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Jul 2026upcoming

Next quarter

Reports Sep 2, 2026, after the close.

Consensus is $2.83 EPS for Jul 2026 across 9 estimates, ranging $2.68 to $2.89.

AVGO Apr 2026

Reported Jun 3, 2026

: 7.43%
: -12.59%

: $2.02
: $2.17
: —
: $22.19B

Reported results

: $22.19B; from $15.00B
: $10.79B; from $5.83B
: $9.31B; from $4.96B
: $1.91; from $1.03

Highlights

AI acceleration: AI semiconductor revenue reached $10.8 billion, up 143% year over year, driven by custom AI accelerators and AI networking; Broadcom expects $16.0 billion in Q3, up more than 200%.
Record quarter: Q2 revenue was $22.19 billion, up 48% year over year and 15% sequentially from $19.31 billion; GAAP operating income rose 85% year over year to $10.79 billion.
Earnings beat: The supplied reported EPS was $2.17 versus consensus of $2.02, a 7.43% surprise; the filing reports GAAP diluted EPS of $1.91, while non-GAAP diluted EPS was $2.44.
Q3 outlook: Revenue guidance of approximately $29.4 billion implies 84% year-over-year growth and 32.5% sequential growth; non-GAAP operating margin is expected at approximately 67%.
Semiconductor mix shift: Semiconductor solutions revenue increased 79% year over year to $15.01 billion and represented 68% of total revenue, versus 56% a year ago; infrastructure software rose 9% to $7.18 billion.
Operating leverage: Adjusted EBITDA increased 52% year over year to $15.24 billion, or 69% of revenue, while GAAP operating margin expanded to 49% from 39%.
Cash generation: Operating cash flow was $10.49 billion and free cash flow was $10.26 billion, equal to 46% of revenue; cash ended the quarter at $19.63 billion.
Customer commitments: Remaining performance obligations were approximately $164.6 billion, including a long-term custom AI accelerator contract, with about 30% expected to be recognized over the next 12 months.
Balance-sheet exposure: Broadcom had $66.72 billion of debt principal outstanding and subsequently disclosed a backstop on customer AI-rack lease obligations with maximum exposure of $29 billion.

Analysis

Broadcom’s fiscal Q2 2026 was a record, AI-led acceleration quarter. Revenue of $22.19 billion rose 48% from $15.00 billion a year ago and 15% from $19.31 billion in Q1. The supplied reported EPS of $2.17 exceeded the $2.02 consensus estimate by 7.43%; the company’s filing reports GAAP diluted EPS of $1.91, up from $1.03 a year ago and $1.50 in Q1, alongside non-GAAP diluted EPS of $2.44. GAAP net income reached $9.31 billion, up 88% year over year and 27% sequentially.

The defining feature was the sharp increase in AI semiconductor demand. AI revenue grew 143% year over year to $10.8 billion, lifting total semiconductor solutions revenue 79% to $15.01 billion and pushing the segment to 68% of sales. Infrastructure software was steadier, growing 9% to $7.18 billion on demand for VMware Cloud Foundation. Broadcom also converted the growth into substantial cash flow, generating $10.26 billion of free cash flow and $15.24 billion of adjusted EBITDA. Management’s Q3 outlook points to further acceleration, with revenue of $29.4 billion and AI semiconductor revenue of $16.0 billion, although the company’s growing inventory, customer concentration, debt and newly disclosed $29 billion lease backstop increase execution and credit exposure.

AI semiconductor acceleration

AI was the clear center of the quarter. Broadcom said AI semiconductor revenue reached $10.8 billion, up 143% year over year and above its prior forecast, with demand driven by custom AI accelerators and AI networking. The company expects that revenue to reach $16.0 billion in Q3, implying growth of more than 200% from the prior-year period.

Custom accelerator commitments: Remaining performance obligations were approximately $164.6 billion, including obligations under a long-term custom AI accelerator contract signed in Q2; approximately 30% is expected to be recognized over the next 12 months.
Capacity preparation: Inventory increased to $4.33 billion from $2.27 billion at fiscal year-end, primarily to support higher expected custom AI accelerator shipments.
Supply concentration: Approximately 95% of wafers manufactured by contract manufacturers during the first two fiscal quarters came from TSMC, highlighting the supply-chain dependency behind the growth.

Q3 growth outlook

Management’s outlook suggests that the Q2 acceleration is not being treated as a one-quarter event. Q3 revenue guidance of approximately $29.4 billion represents 84% year-over-year growth and 32.5% sequential growth from Q2. The company expects non-GAAP operating income to be approximately 67% of revenue and adjusted EBITDA to be approximately 68%, indicating that profitability should remain high despite the heavier semiconductor mix.

Margin profile: Q2 adjusted EBITDA was $15.24 billion, or 69% of revenue, up 52% year over year; Q3 guidance calls for a broadly stable adjusted EBITDA margin.
Gross margin: GAAP gross margin was 69% of revenue versus 68% a year ago, despite semiconductor solutions becoming a larger portion of the business than higher-margin infrastructure software.
Execution risk: Broadcom identified customer concentration, supply constraints, order timing, semiconductor cyclicality and the possibility of customer-funded or deferred-payment AI infrastructure arrangements as material variables.

Segment performance

Semiconductor solutions supplied nearly all of the company’s incremental growth. Segment revenue rose 79% year over year to $15.01 billion, while segment operating income nearly doubled to $9.28 billion from $4.81 billion. Infrastructure software revenue increased 9% to $7.18 billion and operating income grew 13% to $5.65 billion, primarily reflecting demand for VMware Cloud Foundation.

Mix shift: Semiconductor solutions accounted for 68% of Q2 revenue, compared with 56% in the prior-year quarter; infrastructure software declined to 32% from 44%.
Semiconductor profitability: Segment operating margin was approximately 62% versus 57% a year ago, with strong AI demand more than offsetting the lower-margin mix.
Software contribution: Infrastructure software remained highly profitable, with segment operating margin of approximately 79%, but its 9% growth was modest relative to the semiconductor expansion.

Cash flow and capital returns

The quarter produced unusually strong cash conversion. Operating cash flow was $10.49 billion, up 60% year over year, and capital expenditures were only $231 million, producing $10.26 billion of free cash flow, or 46% of revenue. Cash and equivalents rose to $19.63 billion from $14.17 billion at the end of Q1 despite substantial shareholder returns.

Shareholder returns: Broadcom paid $3.09 billion in dividends and repurchased $600 million of stock during Q2; the quarterly dividend was $0.65 per share.
Year-to-date returns: Through the first two fiscal quarters, the company paid $6.18 billion of dividends and repurchased $8.45 billion of common stock.
Debt position: Debt principal stood at $66.72 billion, including $2.25 billion due within 12 months; the company also had a $7.5 billion undrawn revolving credit facility.

AI financing exposure

Broadcom’s growth model is expanding beyond chip sales into arrangements that help customers access AI compute capacity. After quarter-end, the company arranged for an investor partner to assume certain AI-rack purchase and lease agreements and provided a backstop for the customer’s lease obligations over five years. The maximum exposure under that backstop is $29 billion, although Broadcom said it has remedies including assuming the lease or selling the racks in a customer default.

Credit risk: The arrangement can increase Broadcom’s exposure to customer default and recovery risk even if it supports AI deployment and demand for custom accelerators.
Commercial complexity: The company cautioned that leasing racks, alternative financing and deferred-payment models can reduce free cash flow or gross margin and increase operational complexity.
Customer concentration: One semiconductor solutions distributor represented 42% of Q2 revenue, while Broadcom estimated its top five end customers accounted for approximately 45% of revenue.

Broadcom Inc.

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