AVGO 2026 Q2

Total revenue reached a record $22.2 billion, up 48% year on year and above guidance, driven by AI semiconductor strength.

“total revenue reached a record $22.2 billion, up 48% year on year, above our guidance on strength in AI semiconductors”— Hock E. Tan, President and CEO

AI semiconductor revenue hit a record $10.8 billion, up 143% year on year and above the company's prior outlook.

“AI semiconductor revenue at a record $10.8 billion, up 143% year on year and above our outlook”— Hock E. Tan, President and CEO

Q3 AI semiconductor revenue is guided to accelerate to $16 billion, up over 200% year on year, versus 143% growth just reported, with full-year 2026 AI revenue expected at $56 billion, up ~180% from fiscal 2025.

“in Q3 we expect AI semiconductor revenue to accelerate to $16 billion, up over 200% year on year”— Hock E. Tan, President and CEO

Management reiterated fiscal 2027 AI semiconductor revenue guidance of over $100 billion, and indicated the actual trajectory could come in even stronger than that reiterated figure given current momentum.

“we continue to say that it will be over $100 billion in 2027... if anything, it might be stronger”— Hock E. Tan, President and CEO

Non-AI semiconductor bookings exceeded $6 billion, which management called clear evidence the segment is now on a path to full cyclical recovery after prior weakness.

“Bookings during the same period exceeded $6 billion, which is a clear indication we are on the path towards a full cyclical recovery”— Hock E. Tan, President and CEO

Infrastructure Software revenue growth is guided to accelerate sharply to 31% year on year in Q3 from 9% year on year growth just reported in Q2, driven by strong VCF demand.

“we forecast software revenue to be approximately $8.9 billion, up 31% year on year”— Hock E. Tan, President and CEO

Consolidated Q3 revenue is guided to grow 84% year on year to $29.4 billion, an acceleration from the 48% year-on-year growth just reported for Q2.

“we expect our consolidated revenue to grow to $29.4 billion, up 84% year on year”— Hock E. Tan, President and CEO

Management expects revenue content per gigawatt of compute to trend upward over successive product generations as XPUs integrate more HBM, embedded CPU cores, and multi-die designs, a shift from prior flat expectations.

“content per gigawatt will trend up”— Hock E. Tan, President and CEO

AI semiconductor bookings exceeded $30 billion in the quarter versus only $10.8 billion shipped, with visibility now extending out to 2028 as customers place orders far ahead of delivery to secure future capacity.

“Our visibility now extends into 2028”— Hock E. Tan, President and CEO

Gigawatt-scale compute requirements from customers like Anthropic and OpenAI are now far ahead of what management expected just six months ago, indicating accelerating demand growth beyond prior forecasts.

“the compute capacity they require, measured in gigawatt power, is far ahead of what we expected six months ago”— Hock E. Tan, President and CEO

Management characterized current demand for XPUs and networking as unprecedented, describing it as insatiable, a stronger characterization than prior quarters' demand commentary.

“Demand for XPUs and networking is simply insatiable.”— Hock E. Tan, President and CEO

Management now expects substantially more gigawatt growth in 2028 than what is being forecast for 2027, an upward revision in the longer-term demand trajectory.

“We expect 2028 to show substantial growth beyond what we are forecasting for 2027.”— Hock E. Tan, President and CEO

Broadcom entered a new long-term multi-generation agreement with Google in April to develop and supply TPUs and AI networking, though management acknowledged Google will likely diversify some sourcing going forward.

“we fully expect that there will be some diversity of sources for them”— Hock E. Tan, President and CEO

New agreement with Anthropic expands access from over 1 gigawatt of TPU compute in 2026 to an additional 5 gigawatts of next-generation TPU-based compute beginning in 2027.

“we entered into an agreement to enable Anthropic to access another 5 gigawatts of next-generation TPU-based compute beginning in 2027”— Hock E. Tan, President and CEO

New partnership with Meta announced in April to deliver multiple generations of MTIA X XPUs, with an initial 1 gigawatt order received for delivery starting second half of 2027, part of a 3 gigawatt deployment plan through 2028.

“we expect to deploy 3 gigawatts through the end of 2028”— Hock E. Tan, President and CEO

OpenAI silicon delivery is on track for production in late 2026, with a contractual commitment to deploy 1.3 gigawatts in 2027 as part of a larger previously announced 10-gigawatt agreement.

“We have delivered silicon and we are on track for production late 2026.”— Hock E. Tan, President and CEO

Two additional undisclosed customers have placed $6 billion in purchase orders, with shipments now expected to begin late 2026 and accelerate into 2027, representing new customer ramp commitments.

“we have received purchase orders totaling $6 billion”— Hock E. Tan, President and CEO

Newly released VCF 9.1 is seeing extremely strong on-prem deployment, described as driving robust revenue growth for the software segment beyond prior levels.

“the deployment of VCF 9.1 for on-prem cloud computing is extremely strong, driving robust revenue growth”— Hock E. Tan, President and CEO

Networking's share of AI semiconductor revenue, currently near 40%, is expected by management to normalize down to roughly 30% over time as XPU-specific consumption patterns evolve, a shift from the current elevated mix.

“I see 40% as probably the high end for networking as a percentage of AI revenue... I expect the percentage of networking as a share of total AI revenue to be closer to around 30%”— Hock E. Tan, President and CEO

Broadcom is taping out its next-generation 200-terabit Ethernet switch this quarter, following over a year of shipping the prior generation 100-terabit Tomahawk 6, indicating an acceleration in product roadmap execution.

“We will now be taping out our next-generation 200-terabit switch this quarter.”— Hock E. Tan, President and CEO

Q3 consolidated gross margin is guided down further to approximately 74%, from 77.1% in Q2, as AI semiconductor mix continues to grow, though management stresses this is a mix effect rather than a structural margin change.

“we expect Q3 consolidated gross margin to be down to approximately 74%. This decline in gross margin does not represent a structural change in semiconductor margin”— Kirsten Spears, Chief Financial Officer

Gross margin declined 32 basis points year on year as semiconductors became a larger proportion of the overall product mix.

“Gross margin was 77.1% of revenue in the quarter, down 32 basis points year on year as semiconductor became a larger proportion of our product mix”— Kirsten Spears, Chief Financial Officer

As TPU/ASIC revenue accelerates it will continue pressuring overall margins, but management expects this to be partly offset by richer margins in the growing AI networking/connectivity business.

“as the TPUs continue to accelerate, there will be pressure overall on gross margin. But the connectivity side... has very rich margins, so it will offset some of that pressure”— Kirsten Spears, Chief Financial Officer

Operating margin increased 200 basis points year on year even as gross margin declined, which management attributed to strong operating leverage from scaling AI revenue.

“even with the decline in gross margin, operating margin increased 200 basis points year over year”— Kirsten Spears, Chief Financial Officer

Semiconductor segment operating margin rose 460 basis points year on year to 62%, reflecting strong operating leverage as AI revenue scaled.

“Semiconductor operating margin of 62% was up 460 basis points year on year, reflecting our strong operating leverage”— Kirsten Spears, Chief Financial Officer

Infrastructure Software operating margin rose 310 basis points year on year to approximately 79%.

“Q2 software operating margin was up 310 basis points year on year to approximately 79%”— Kirsten Spears, Chief Financial Officer

Despite the expected further decline in gross margin, Q3 operating margin is guided to hold flat at 67%, which management frames as demonstrating continued strong operating leverage.

“we expect Q3 operating margin to be 67%, which is flat quarter on quarter, demonstrating our strong operating leverage”— Kirsten Spears, Chief Financial Officer

Operating expenses in the semiconductor segment reflected increased R&D investment specifically directed at leading-edge AI semiconductors, an intensified spending focus versus prior periods.

“Operating expenses of $1.2 billion reflected increased investment in R&D for leading-edge AI semiconductors”— Kirsten Spears, Chief Financial Officer

CEO confirmed that despite a new long-term Google agreement, Google is expected to diversify some of its compute sourcing given the scale of its growth, acknowledging a potential dilution of Broadcom's exclusivity within that account.

“we fully expect that there will be some diversity of sources for them”— Hock E. Tan, President and CEO

Broadcom is forming a new AI XPU compute platform with investors including Apollo and Blackstone to fund deployment of more than 20 gigawatts of capacity through 2027, with a first $35 billion tranche currently being launched by Apollo.

“The first tranche of this platform, valued at $35 billion, is currently being launched by Apollo.”— Hock E. Tan, President and CEO