Broadcom (NASDAQ:AVGO) reported record financial results for its first quarter of fiscal 2026, citing faster-than-expected growth in AI semiconductors and continued profitability across both its Semiconductor Solutions and Infrastructure Software segments. Management also issued second-quarter guidance calling for sharp year-over-year revenue acceleration and reiterated confidence in multi-year demand for custom AI accelerators and AI networking.
Quarter results: record revenue and profitability
For fiscal Q1 2026, Broadcom posted consolidated revenue of $19.3 billion, up 29% year-over-year and above company guidance, which CEO Hock Tan attributed to “better than expected growth in AI semiconductors.” Broadcom delivered consolidated adjusted EBITDA of $13.1 billion, representing 68% of revenue, a result Tan described as reflecting operating leverage from the company’s scale.
AI drove semiconductor growth; networking mix expected to rise
Broadcom’s Semiconductor Solutions segment generated Q1 revenue of $12.5 billion, up 52% year-over-year. Tan said AI semiconductor revenue grew 106% year-over-year to $8.4 billion, exceeding the company’s outlook, and he expects that momentum to accelerate in Q2.
Within AI, Tan emphasized both custom accelerators and AI networking. He said Q1 AI networking revenue grew 60% year-over-year and represented roughly one-third of total AI revenue. For Q2, Broadcom expects AI networking to rise to 40% of total AI revenue, and Tan said the company is “clearly gaining share in networking.”
Tan highlighted demand for Broadcom’s Tomahawk 6 switch at 100 terabit per second and its 200G SerDes, and said the company expects to extend its lead with Tomahawk 7 in 2027, which he said will feature “double the performance.” He also discussed Direct Attach Copper as an advantage in scale-up networking, arguing it is lower cost and power than optical alternatives and that Broadcom’s SerDes roadmap can keep customers on copper longer.
Customer roadmap updates and “line of sight” to 2027 AI chip revenue
Tan said Broadcom’s custom AI accelerator ramp is “progressing very well” across five customers and that the company “now” has a sixth customer. He provided several customer-specific updates:
- Google: Tan said Broadcom continues its growth trajectory in 2026 with demand for the seventh generation Ironwood TPU, and expects stronger demand from next generations in 2027 and beyond.
- Anthropic: Tan said Broadcom is “off to a very good start” in 2026 for 1 gigawatt of TPU compute, with 2027 demand expected to surge to in excess of 3 gigawatts.
- Meta: Tan pushed back on “recent analyst reports,” stating Meta’s custom accelerator MTIA roadmap is “alive and well” and that Broadcom is “shipping now,” with next-generation XPUs expected to scale to “multiple gigawatts” in 2027 and beyond.
- Customers 4 and 5: Tan said shipments are strong this year and expected to more than double in 2027.
- OpenAI: Tan said Broadcom expects OpenAI to deploy its first-generation XPU “in volume” in 2027 at over 1 gigawatt of compute capacity.
Tan also said Broadcom has secured key supply chain components for 2026 through 2028, citing constrained capacity in leading-edge wafers, high-bandwidth memory, and substrates. In Q&A, management said the company had been early to lock up key materials such as “T-glass,” and that multi-year, deep engagements with customers help support long-range capacity planning.
On longer-term demand, Tan stated Broadcom’s visibility “in 2027 has dramatically improved” and that the company now has “line of sight” to achieve AI revenue from “chips, just chips” in excess of $100 billion in 2027. In a follow-up question, he clarified that the $100 billion-plus figure referred to silicon content (including XPUs and networking silicon such as switch chips and DSPs), not broader systems. He also said that, viewed in power terms, Broadcom is “seeing it getting close to 10 gigawatts” in 2027, while noting that dollars per gigawatt can vary by customer.
Non-AI semiconductors flat; software guided higher on VMware
Non-AI semiconductor revenue in Q1 was $4.1 billion, flat year-over-year, with enterprise networking, broadband, and server storage growth offset by a seasonal decline in wireless. For Q2, Broadcom forecast non-AI semiconductor revenue of approximately $4.1 billion, up 4% year-over-year.
Infrastructure Software revenue in Q1 was $6.8 billion, up 1% year-over-year and in line with guidance. For Q2, Broadcom guided Infrastructure Software revenue of approximately $7.2 billion, up 9% year-over-year.
Tan said VMware revenue grew 13% year-over-year and that total contract value booked in Q1 exceeded $9.2 billion, sustaining annual recurring revenue growth of 19% year-over-year. He characterized VMware Cloud Foundation as an “essential software layer” in data centers integrating CPUs, GPUs, storage, and networking into a private cloud environment, and argued that AI will increase, not decrease, enterprise need for VMware.
Cash flow, shareholder returns, and Q2 outlook
Broadcom generated $8.0 billion of free cash flow in Q1, representing 41% of revenue, and spent $250 million in capital expenditures. The company ended the quarter with $14.2 billion of cash and $3.0 billion of inventory, with days of inventory on hand rising to 68 days from 58 days in fiscal Q4 as Broadcom “continue[d] to secure components to support strong AI demand.”
On capital allocation, Broadcom paid $3.1 billion in dividends (based on a $0.65 quarterly dividend per share) and repurchased $7.8 billion of stock (about 23 million shares), returning $10.9 billion to shareholders in Q1. Spears also announced an additional $10 billion authorization for share repurchases through the end of calendar year 2026.
For fiscal Q2 2026, Broadcom guided for:
- Consolidated revenue: approximately $22 billion, up 47% year-over-year
- Semiconductor revenue: approximately $14.8 billion, up 76% year-over-year
- AI semiconductor revenue: approximately $10.7 billion, up 140% year-over-year
- Infrastructure Software revenue: approximately $7.2 billion, up 9% year-over-year
- Gross margin: flat sequentially at 77%
- Adjusted EBITDA: approximately 68% of revenue
- Non-GAAP tax rate: approximately 16.5%
During Q&A, Tan also pushed back on a question suggesting gross margin could be pressured as the company ships more AI-related products, saying Broadcom’s gross margin is “solidly” at the reported level and that AI mix should not materially change the model.
Broadcom said it plans to report fiscal Q2 2026 results after the market closes on Wednesday, June 3, 2026.
About Broadcom (NASDAQ:AVGO)
Broadcom Inc (NASDAQ: AVGO) is a global technology company that designs, develops and supplies semiconductor and infrastructure software solutions for a broad range of markets. The company’s semiconductor business provides components and systems for wired and wireless communications, enterprise and cloud storage, networking and broadband access, serving original equipment manufacturers, cloud service providers, telecommunications carriers and industrial customers worldwide. Broadcom is headquartered in Irvine, California, and operates globally with research, development and sales organizations across North America, Europe and Asia.
On the semiconductor side, Broadcom’s portfolio includes system-on-chip (SoC) and application-specific integrated circuit (ASIC) solutions, radio-frequency and connectivity components, Ethernet switching and PHY devices, storage adapters and controllers, optical transceivers and other networking silicon.
