Broadcom FY2026 Q1 Earnings: AI Revenue Doubles, Record Results, Strong Guidance, $10B Buyback

Core Insights

Broadcom's （AVGO）FY2026 Q1 revenue reached $19.311 billion, up 29% year-over-year, surpassing analyst expectations; adjusted EPS was $2.05, up 28% year-over-year, also beating expectations. AI-related semiconductor revenue hit $8.4 billion, up 106% year-over-year, fueling strong overall performance. Infrastructure software revenue grew only 1%, but provided stable cash flow. Shares rose over 5% after hours initially but fluctuated due to software growth concerns. The company approved a new $10 billion buyback authorization and maintained a quarterly dividend of $0.65.  Bitget now supports AVGOUSD contracts with up to 25x leverage.

 

 

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Detailed Breakdown

1. Overall Revenue and Profit Performance

   • Quarterly revenue: $19.311 billion, up 29% year-over-year, with sequential growth, exceeding analyst expectations of $19.258 billion.
   • Adjusted earnings per share (EPS): $2.05, up 28% year-over-year, exceeding expectations of $2.03.
   • Adjusted EBITDA: $13.128 billion, up 30% year-over-year, with a margin of 68%, higher than the guided 67%.
   • Adjusted net income: $10.185 billion, up 30% year-over-year.
   • Operating cash flow: $8.26 billion; capital expenditures: $250 million; free cash flow: $8.01 billion, up 33% year-over-year, accounting for 41% of revenue.
   • Comparison to expectations: Revenue and EPS both exceeded expectations, with AI semiconductor revenue surpassing the guided $8.2 billion.

2. Semiconductor Solutions (Including AI) Performance

   • Revenue: $12.515 billion, up 52% year-over-year (compared to 34.5% in the previous quarter), exceeding expectations of $12.31 billion, accounting for 65% of total revenue (up 10 percentage points year-over-year, up 4 percentage points sequentially).
   • AI-related revenue: $8.4 billion, up 106% year-over-year, exceeding the guided $8.2 billion.
   • Key drivers: Strong demand for custom AI accelerators and AI networking, accelerating growth in the semiconductor business.

3. Other Business Segments Performance

   • Infrastructure software (including VMware): Revenue of $6.796 billion, up 1% year-over-year, accounting for 35% of total revenue (down 10 percentage points year-over-year, down 4 percentage points sequentially).
   • Key drivers: Limited growth in software business, but serving as a cash flow stabilizer, with no specific operating income or margin details provided.

4. Shareholder Returns and Buyback Plan

   • Quarterly dividend: $0.65 per share, totaling approximately $3.086 billion.
   • Q1 shareholder returns total: $10.9 billion, including dividends and $7.8 billion in buybacks.
   • New buyback authorization: $10 billion, effective until December 31, 2026.
   • Key investment areas: No specific future capital expenditure plan details; Q1 capital expenditures of $250 million, primarily for operational support.
   Item Amount ($ Billion) Notes

   Dividend	3.086	Quarterly total
   Buyback	7.8	Q1 executed
   New Authorization	10	Until end of 2026

    

5. 2026 Q2 Performance Guidance

   • Revenue expectation: Approximately $22 billion, up 47% year-over-year, exceeding analyst expectations of $20.53 billion (about 7.2% above expectations).
   • AI semiconductor revenue expectation: $10.7 billion, up 143% year-over-year, up over 27% sequentially.
   • Adjusted EBITDA margin: 68%, flat compared to Q1.
   • Midpoint: Revenue of $22 billion (no specific operating income midpoint details).

6. Market Context and Investor Concerns

   • Core contradictions: Software business growth of only 1%, raising investor concerns about drag on overall performance; high interest rate environment increasing interest expenses to $801 million.
   • Market challenges: High customer concentration; strong future customer demand, such as Anthropic's plan to introduce 3GW of computing power in FY2027, OpenAI's mass deployment of chips in 2027, and smooth progress on Meta's custom chip roadmap.
   • Investor reactions: Shares initially fell after the earnings release, then rose over 5%, with intraday gains over 1%; high expectations leading to stock revaluation, with software growth and structural issues amplifying volatility.

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Disclaimer

This article is for reference only and does not constitute any investment advice.