Broadcom Q2 FY2026: AI Momentum Fuels Record Growth

Broadcom Inc. (Nasdaq: AVGO) delivered a strong second-quarter fiscal 2026 performance, underscoring the company’s growing dominance in artificial intelligence infrastructure and custom silicon solutions. The chipmaker posted record revenue, profitability, and free cash flow, as accelerating AI demand continued to reshape its growth trajectory.

Fundamentals: Record Q2 Growth

For the quarter ended May 3, 2026, Broadcom reported revenue of $22.19 billion, representing a robust 48% year-over-year increase. The growth was primarily driven by the semiconductor business, where AI-related demand significantly accelerated. Semiconductor solutions revenue surged 79% year-over-year to $15.01 billion, accounting for 68% of total revenue, while infrastructure software revenue increased 9% to $7.18 billion.

Management highlighted AI as the key growth catalyst. CEO Hock Tan noted that semiconductor revenue from AI reached $10.8 billion during the quarter, climbing 143% from the prior year and exceeding internal expectations. The growth was fueled by rising demand for custom AI accelerators and AI networking, reinforcing Broadcom’s expanding role in hyperscale AI deployments.

Profitability also improved meaningfully. Gross margin expanded to 69.5% from 68.0% a year ago, while operating income jumped to $10.79 billion, lifting operating margin to 48.6%, compared to 38.8% in the same quarter last year. On a non-GAAP basis, operating income rose to $14.93 billion, with operating margin improving to 67.3%, highlighting strong operating leverage.

Bottom-line growth remained impressive. GAAP net income climbed 88% year-over-year to $9.31 billion, while non-GAAP net income rose 55% to $12.07 billion. Diluted earnings per share came in at $1.91 on a GAAP basis and $2.44 on a non-GAAP basis, both reflecting strong earnings momentum.

Adjusted EBITDA rose 52% year-over-year to a record $15.24 billion, representing a highly efficient 69% of revenue.

Strong Cash Flow and Liquidity

Broadcom's balance sheet also remains healthy. Cash and cash equivalents increased to $19.63 billion at quarter-end from $14.17 billion in the previous quarter, although total debt remained elevated at $64.91 billion.

Cash generation remained another key strength. Broadcom produced $10.49 billion in operating cash flow during the quarter and generated free cash flow of $10.26 billion after spending just $231 million on capital expenditures. Free cash flow represented approximately 46% of revenue. The company continued returning capital to shareholders through its quarterly dividend, maintaining a payout of $0.65 per share, totaling $3.09 billion.

Q3 FY2026 Business Outlook

Looking ahead, the company expects revenue of approximately $29.4 billion for the third quarter of fiscal 2026, implying 84% year-over-year growth, alongside a non-GAAP operating margin (as a percent of projected revenue) of around 67% and adjusted EBITDA margin near 68%. Management also expects AI semiconductor revenue to reach $16 billion in Q3, representing growth of more than 200% year-over-year.

AVGO Stock Technical Analysis

From a technical perspective, resistance remains near the $507 level for AVGO stock. A decisive breakout and sustained move above this threshold could open the path toward the next upside target around $545. However, if profit-taking emerges or the market responds with a “sell-the-news” reaction to the robust earnings report, the stock may pull back to test lower support zones. The pullback would find initial support zone near $376. A deeper correction could expose additional support in the $361 to $351 range.