Broadcom Inc. 10-Q Summary: Fiscal Q1 2026
Business Context and Reporting Period
This report covers the fiscal quarter ended February 1, 2026. Broadcom Inc. operates as a global technology leader in semiconductor and infrastructure software solutions. The company operates two reportable segments: Semiconductor Solutions (including AI accelerators and networking) and Infrastructure Software (including virtualization and security). The fiscal year 2026 is a 52-week year.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Net Revenue | $19,311 million | $14,916 million |
| Gross Margin | $13,157 million (68%) | $10,145 million (68%) |
| Operating Income | $8,563 million (44%) | $6,260 million (42%) |
| Net Income | $7,349 million | $5,503 million |
| Diluted EPS | $1.50 | $1.14 |
| Operating Cash Flow | $8,260 million | $6,113 million |
| Cash and Equivalents | $14,174 million | $9,307 million |
| Total Debt (Principal) | $67,970 million | $67,120 million |
Material Changes vs. Prior Period
- Revenue Growth: Total net revenue increased 29% year-over-year, driven primarily by a 52% surge in Semiconductor Solutions revenue ($12.5 billion vs. $8.2 billion). Infrastructure Software revenue remained relatively flat, up 1%.
- Expense Increases: Research and Development (R&D) expenses rose 32% to $2.97 billion, and Selling, General, and Administrative (SG&A) expenses increased 7% to $1.02 billion. Both increases were primarily attributed to higher stock-based compensation.
- Stock-Based Compensation: Total stock-based compensation expense jumped to $2.18 billion from $1.28 billion, driven by the recognition of "Two-Year Equity Awards" granted in the prior fiscal year.
- Capital Allocation: The company repurchased $7.85 billion of common stock (23 million shares) and paid $3.09 billion in dividends during the quarter.
- Debt Activity: Broadcom issued $4.5 billion in new senior notes in January 2026 and repaid $3.65 billion of existing debt.
Guidance, Outlook, and Risks
- Outlook: Management attributes strong performance to robust demand for AI-related semiconductor solutions, specifically custom AI accelerators and AI networking products. No specific numerical guidance for future quarters is provided in this text.
- Customer Concentration: A single distributor accounted for 42% of net revenue, and the top five end customers represented approximately 50% of total revenue. This concentration poses a significant risk to future stability.
- Supply Chain Risks: Approximately 95% of wafers are manufactured by TSMC. The company faces risks related to capacity constraints, pricing increases, and geopolitical tensions affecting the supply chain.
- Regulatory and Tax Risks: The company faces potential tax liabilities related to the VMware acquisition and ongoing regulatory scrutiny regarding antitrust and export controls. A $315 million gain was recognized from the reversal of excise tax charges related to the VMware acquisition.
- Subsequent Events: In March 2026, the Board authorized a new $10 billion stock repurchase program and declared a quarterly dividend of $0.65 per share.
Investor Verification Checklist
- Verify the sustainability of the 52% revenue growth in the Semiconductor Solutions segment and the specific contribution of AI-related products.
- Assess the impact of the $2.18 billion stock-based compensation expense on future profitability and cash flow.
- Monitor the concentration risk associated with the top distributor (42% of revenue) and top five end customers (50% of revenue).
- Review the details of the new $10 billion stock repurchase program authorized in March 2026 and its execution timeline.
- Confirm the status of potential tax liabilities related to the VMware acquisition and the impact of global minimum tax provisions.
- Track the company's reliance on TSMC for 95% of wafer manufacturing and any potential supply chain disruptions.