Broadcom Inc.

Broadcom reported Q2 fiscal 2026 consolidated revenue of $22.2 billion, up 48% year over year. Q2 non-GAAP gross margin was 77.1%, down 230 basis points year over year, while operating income was a record $14.9 billion and operating margin was 67.3%, up 200 basis points year over year. Adjusted EBITDA was $15.2 billion, or 69% of revenue, and free cash flow was a record $10.3 billion. Semiconductor Solutions revenue was a record $15 billion, up 79% year over year, including AI semiconductor revenue of $10.8 billion, up 143% year over year; infrastructure software revenue was $7.2 billion, up 9% year over year. For Q3, Broadcom guided to consolidated revenue of $29.4 billion, up 84% year over year, semiconductor revenue of about $20.5 billion, including AI semiconductor revenue of $16 billion, and software revenue of about $8.9 billion. Q3 consolidated gross margin is expected to be about 74%, operating margin about 67%, and adjusted EBITDA about 68% of revenue. The company also guided the non-GAAP tax rate for Q3 and fiscal 2026 to about 16% and the diluted share count to about 4.94 billion.

Hock Tan’s message was that AI demand is still accelerating and Broadcom is positioned as a core supplier of custom AI accelerators and networking. He stressed that the company has strong strategic ties with large customers such as Google, Anthropic, OpenAI, and Meta, and that bookings and visibility have extended out to 2028. His tone was confident and emphatic, repeatedly describing demand as 'insatiable' and the AI trajectory as continuing into fiscal 2027 and 2028.

Kirsten Spears emphasized that the quarter’s margin profile remained very strong despite mix pressure from faster-growing AI semiconductors. She highlighted Q2 gross margin of 77.1%, operating margin of 67.3%, adjusted EBITDA of $15.2 billion, and record free cash flow of $10.3 billion, along with cash rising to $19.6 billion from $14.2 billion in the prior quarter. She also noted inventory of $4.3 billion and 86 days of inventory on hand versus 68 days in Q1, explaining that Broadcom is securing supply for expected AI growth in the second half. On capital allocation, the company paid $3.1 billion of dividends in the quarter at $0.65 per share.

Analysts focused on the AI revenue ramp, the size and timing of backlog, customer concentration, networking mix, supply availability, and whether Broadcom’s custom AI business is changing structurally. Hock Tan said the fiscal 2026 AI revenue math still supports about $56 billion, reiterated that fiscal 2027 AI semiconductor revenue should exceed $100 billion, and said bookings reflect long lead times tied to power, wafers, memory, and infrastructure. He also said Broadcom is comfortable with supply for 2026, 2027, and is already working on 2028 and 2029, while clarifying that the Anthropic arrangement is Broadcom supplying TPU compute rather than a backstop financing structure.