Equity Research · Earnings Update
Broadcom Inc (AVGO)
Summary and key takeaways
Broadcom reported fiscal Q2 2026 net revenue of $22.2 billion, up 48% year-over-year, with EPS of $2.44 beating the $2.32 estimate. AI semiconductor revenue was $10.8 billion, up 143% year-over-year — nearly half of total revenue now coming from AI-specific chips. Management guided AI semiconductor revenue to grow further to $16.0 billion in Q3, with full-year 2026 AI semiconductor revenue expected at $56 billion (+~180% YoY) and 2027 AI revenue guidance reiterated above $100 billion.
Results snapshot
| Metric | FQ2 2026 | YoY change |
|---|---|---|
| Net revenue | $22.2B | +48% |
| Non-GAAP net income | $12.1B | — |
| EPS | $2.44 | Beat $2.32 est. |
| AI semiconductor revenue | $10.8B | +143% |
| FY2026 AI revenue guide | $56B | +~180% vs. 2025 |
Analysis
CEO Hock Tan's disclosure of six core custom-chip customers — including Anthropic, Google, and Meta — is a meaningfully different, and arguably better-diversified, customer base than a single-hyperscaler-dependent AI supplier. Custom AI silicon (ASICs) is the same business model as Marvell's watchlist thesis, except Broadcom is already executing it at massive scale: $10.8 billion in a single quarter, growing 143% year-over-year. The reiterated >$100 billion 2027 AI revenue target, if achieved, would make Broadcom's AI business alone larger than most companies' total revenue.
AVGO correlates most strongly in the book's own correlation matrix with QQQ (0.68) and VRT (0.55), and is only modestly correlated with the pure-play memory names (SNDK, MU) — consistent with the July 8 correlation-matrix Opinion piece's observation that AVGO trades more like a diversified large-cap than a single-theme AI bet.
Guidance
- Q3 fiscal 2026 revenue: ~$29.4 billion (+84% YoY)
- Q3 non-GAAP operating income: ~67% of revenue; Adjusted EBITDA ~68% of revenue
- Q3 AI semiconductor revenue guided to $16.0 billion
- Full-year 2026 AI semiconductor revenue: ~$56 billion
- 2027 AI revenue guidance reiterated: over $100 billion
Updated investment thesis
AVGO is a Core holding on custom AI silicon and networking chips for hyperscalers — a differentiated, already-profitable-at-scale expression of the AI-infrastructure theme relative to the book's other semiconductor names. This quarter's results and the six-named-customer disclosure (Anthropic, Google, Meta, and three others) are strong evidence the diversified-customer-base thesis is real, not aspirational.
No position changes from this report.
Risks to this position
- Guidance-achievability risk: an 84% YoY revenue growth guide for Q3 and a $100B+ 2027 AI revenue target are extremely aggressive multi-year commitments.
- Customer concentration within diversification: six named custom-chip customers is more diversified than a single hyperscaler, but still a concentrated enterprise customer base.
- Competitive risk: custom ASIC design wins can be lost to competitors (including Marvell, on the book's Watchlist) in future product cycles.
Sources & references
- Broadcom Inc. Announces Second Quarter Fiscal Year 2026 Financial Results — investors.broadcom.com
- Broadcom posts Q2 2026 surge with AI growth and lifts Q3 outlook — StockTitan
- Broadcom (AVGO) earnings report Q2 2026 — CNBC