Broadcom’s AVGO second-quarter fiscal 2026 results, set to be reported on June 3, are expected to reflect the benefits of expanding AI offerings. AVGO’s Semiconductor segment revenues are anticipated to have benefited from strong demand for custom AI accelerators (XPUs), which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models.
AI revenues are expected to jump 140% year over year to $10.7 billion, thanks to strong demand for XPUs, revenues from which surged 140% year over year in the fiscal first quarter. AI semiconductor revenues surged 106% year-over-year to $8.4 billion in the previous quarter. A strong clientele that includes Google, Anthropic and Meta Platforms, among others, is expected to have driven top-line growth in the to-be-reported quarter.
Broadcom expects semiconductor revenues to jump 76% year over year to $14.8 billion in the second quarter of fiscal 2026. The Zacks Consensus Estimate for Broadcom’s Semiconductor revenues is pegged at $14.8 billion, indicating growth of 76% from the figure reported in the year-ago quarter.
Broadcom Inc. Revenue (TTM)
Broadcom Inc. revenue-ttm | Broadcom Inc. Quote
Click here to learn how AVGO’s overall fiscal second-quarter performance is likely to have been.
AVGO’s Infrastructure Software to Benefit From VMware
VMware’s growing traction is expected to have driven the Infrastructure Software segment’s revenue growth in the fiscal second quarter. Broadcom’s focus on shifting VMware products to a subscription-based model and growing adoption of VMware Cloud Foundation, which is anticipated to have aided top-line growth in the to-be-reported quarter.
AVGO expects infrastructure software revenue to be approximately $6.7 billion, up 15% year over year. The Zacks Consensus Estimate for Infrastructure Software revenues is pegged at $7.2 billion, indicating 9% year-over-year growth.
Lower-Margin XPUs to Hurt AVGO’s Gross Margin
Although Broadcom has been benefiting from higher sales of XPUs, these lower-margin products are expected to impact the gross margin negatively. AVGO expects the gross margin to be flat sequentially for the second quarter of fiscal 2026. Broadcom expects an adjusted EBITDA margin of 68% in the fiscal second quarter, flat on a sequential basis.
Zacks Rank and Stocks to Consider
AVGO currently has a Zacks Rank #3 (Hold).
Advanced Energy Industries AEIS, Avnet AVT and Amphenol APH are some better-ranked stocks in the broader Zacks Computer and Technology sector. All three stocks currently sport a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Advanced Energy Industries, Amphenol and Avnet is pegged at 30.1%, 24% and 43.3%, respectively. In terms of share price movement, Advanced Energy Industries, Amphenol and Avnet have appreciated 40.8%, 8.3% and 80.9%, respectively, outperforming AVGO’s 32.9% year to date.
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