Broadcom AVGO reported second-quarter fiscal 2026 non-GAAP earnings of $2.44 per share, which beat the Zacks Consensus Estimate by 1.67% and rose 54% year over year.
Revenues rose 48% year over year to $22.19 billion and beat the Zacks Consensus Estimate by 0.68%. The quarter benefited from accelerating AI semiconductor revenues, which reached $10.8 billion, up 143% year over year and exceeding the company’s outlook.
AVGO shares were down 0.49% at the time of writing this article. The stock has appreciated 84.4% in the trailing-12 months compared with the Zacks Computer & Technology sector’s return of 55.2%.
AVGO’s Q2 Details
Semiconductor solutions revenues (68% of net revenues) totaled $15.01 billion, up 79% year over year. Management said the upside was powered by AI semiconductors, with networking representing almost 40% of AI revenues in the quarter.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
Infrastructure software revenues (32% of net revenues) climbed 9% year over year to $7.18 billion. Management noted that software bookings stayed strong and the company sustained ARR growth of 17% year over year.
Profitability remained a standout despite mix headwinds. Non-GAAP gross margin was 77.1%, down 230 basis points year over year as semiconductors became a larger proportion of the mix.
Research and development expenses, as a percentage of net revenues, decreased 290 bps year over year to 7.2%. SG&A expenses, as a percentage of net revenues, decreased 130 bps to 2.6%.
Adjusted EBITDA rose 52% year over year to $15.24 billion. The adjusted EBITDA margin was 68.7%, up 210 bps year over year.
Operating margin rose 52.4% year over year to a record $14.9 billion, reflecting strong operating leverage as non-GAAP operating margin expanded 200 bps year over year to 67.3%.
AVGO’s Balance Sheet & Cash Flow
As of May 3, 2026, cash and cash equivalents were $19.63 billion, up from $14.17 billion as of Feb.1, 2026.
Total debt (including the current portion of $3.15 billion) was $66.06 billion as of Feb. 1, 2026 compared with $65.14 billion as of Nov. 2, 2025.
Broadcom generated $10.49 billion in cash flow from operations in the quarter compared with $8.26 billion in the previous quarter. The free cash flow was $10.26 billion compared with $8.01 billion in the prior quarter.
During the quarter, Broadcom paid stockholders $3.09 billion of cash dividends based on a quarterly common stock dividend of $0.65 per share. The company also repurchased $600 million of common stock under its repurchase program.
AVGO Offers Q3 Guidance
For the third quarter of fiscal 2026, Broadcom expects revenues of approximately $29.4 billion, indicating 84% year-over-year growth. The company expects non-GAAP operating income and adjusted EBITDA to be approximately 67% and 68% of projected revenues, respectively.
Management also guided for semiconductor revenues of roughly $20.5 billion and infrastructure software revenues of about $8.9 billion for the third quarter of fiscal 2026. Within semiconductors, management expects AI semiconductor revenues to accelerate to $16 billion in the third quarter of fiscal 2026, soaring more than 200% year over year, as demand for custom AI accelerators and AI networking remains strong.
Zacks Rank & Stocks to Consider
Currently, AVGO carries a Zacks Rank #3 (Hold).
Advanced Energy Industries AEIS, Analog Devices ADI and Box BOX are some better-ranked stocks that investors can consider in the broader sector.
Advanced Energy Industries, Analog Devices and Box each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Advanced Energy Industries, Analog Devices and Box are currently pegged at 30.11%, 28.76% and 58.14%, respectively.
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