Broadcom (NASDAQ:AVGO) Releases Earnings Results

Key Points

• Broadcom beat Q2 expectations, reporting adjusted EPS of $2.44 on revenue of $22.19 billion, both slightly ahead of analyst estimates. Revenue jumped 47.9% year over year, highlighting continued strong execution.
• AI demand was the main growth engine, with AI semiconductor revenue hitting a record $10.8 billion and bookings topping $30 billion. Management said it remains confident in full-year AI semiconductor revenue of $56 billion and a long-term target above $100 billion in fiscal 2027.
• Broadcom issued upbeat guidance for Q3 revenue of about $29.4 billion, though gross margin is expected to dip as AI chips become a bigger mix of sales. The company also reported strong infrastructure software growth, including 9% revenue growth and 17% ARR growth.

Broadcom (NASDAQ:AVGO - Get Free Report) released its quarterly earnings data on Wednesday. The semiconductor manufacturer reported $2.44 earnings per share for the quarter, beating analysts' consensus estimates of $2.40 by $0.04, FiscalAI reports. Broadcom had a return on equity of 38.61% and a net margin of 36.57%.The business had revenue of $22.19 billion during the quarter, compared to analyst estimates of $22.13 billion. During the same quarter last year, the business posted $1.58 EPS. The company's revenue was up 47.9% on a year-over-year basis.

Here are the key takeaways from Broadcom's conference call:

• Broadcom posted record Q2 revenue of $22.2 billion, up 48% year over year, driven by strong AI semiconductor demand. Operating margin held at a record 67% and free cash flow reached a record $10.3 billion.
• AI semiconductor revenue hit a record $10.8 billion in Q2, and the company said bookings exceeded $30 billion, with visibility now extending into 2028. Management reiterated full-year AI semiconductor revenue of $56 billion and continued confidence in >$100 billion in fiscal 2027.
• Broadcom highlighted major long-term AI customer wins across Google, Anthropic, OpenAI, Meta, and other customers, with several multi-gigawatt deployments expected to ramp in 2027 and beyond. Management said these programs support durable AI growth and already include $6 billion of purchase orders to date.
• Infrastructure Software revenue rose 9% to $7.2 billion, with ARR growth of 17% year over year and strong demand for VMware Cloud Foundation 9.1. The new release is aimed at improving efficiency and supporting enterprise AI inferencing workloads across multiple CPU/GPU platforms.
• Management guided Q3 consolidated revenue to $29.4 billion, with AI semiconductor revenue expected to accelerate to $16 billion. However, gross margin is projected to decline to about 74% due to mix shift toward AI semiconductors and away from software, even as operating margin is expected to stay around 67%.

Broadcom Price Performance

Shares of NASDAQ AVGO traded down $2.34 during trading on Wednesday, reaching $479.23. The company had a trading volume of 47,272,708 shares, compared to its average volume of 24,757,096. The company has a debt-to-equity ratio of 0.80, a quick ratio of 1.73 and a current ratio of 1.90. The stock has a market cap of $2.27 trillion, a PE ratio of 93.60, a PEG ratio of 0.95 and a beta of 1.41. The business's 50 day moving average price is $386.31 and its 200-day moving average price is $359.32. Broadcom has a 52 week low of $241.11 and a 52 week high of $495.00.

Insider Buying and Selling at Broadcom

In other Broadcom news, Director Justine Page sold 2,018 shares of Broadcom stock in a transaction on Wednesday, April 8th. The shares were sold at an average price of $353.00, for a total value of $712,354.00. Following the sale, the director directly owned 18,164 shares in the company, valued at approximately $6,411,892. The trade was a 10.00% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Gayla J. Delly sold 1,000 shares of the stock in a transaction on Thursday, April 9th. The shares were sold at an average price of $358.31, for a total transaction of $358,310.00. Following the completion of the sale, the director owned 32,352 shares of the company's stock, valued at approximately $11,592,045.12. This represents a 3.00% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold a total of 324,282 shares of company stock valued at $106,425,249 over the last 90 days. Company insiders own 1.90% of the company's stock.

Hedge Funds Weigh In On Broadcom

Hedge funds have recently bought and sold shares of the company. Cardano Risk Management B.V. grew its position in Broadcom by 895.2% during the fourth quarter. Cardano Risk Management B.V. now owns 12,689,800 shares of the semiconductor manufacturer's stock valued at $4,391,940,000 after buying an additional 11,414,701 shares during the period. State Street Corp boosted its position in Broadcom by 2.7% during the fourth quarter. State Street Corp now owns 190,084,351 shares of the semiconductor manufacturer's stock worth $65,788,194,000 after purchasing an additional 5,040,801 shares during the period. Price T Rowe Associates Inc. MD boosted its position in Broadcom by 3.0% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 85,546,083 shares of the semiconductor manufacturer's stock worth $29,607,500,000 after purchasing an additional 2,491,644 shares during the period. California Public Employees Retirement System boosted its position in Broadcom by 17.4% during the fourth quarter. California Public Employees Retirement System now owns 13,616,185 shares of the semiconductor manufacturer's stock worth $4,712,562,000 after purchasing an additional 2,016,804 shares during the period. Finally, Mercer Global Advisors Inc. ADV boosted its position in Broadcom by 212.5% during the third quarter. Mercer Global Advisors Inc. ADV now owns 1,016,048 shares of the semiconductor manufacturer's stock worth $332,714,000 after purchasing an additional 1,919,017 shares during the period. 76.43% of the stock is owned by institutional investors.

Analyst Ratings Changes

Several brokerages have issued reports on AVGO. Wells Fargo & Company reaffirmed an "overweight" rating and set a $545.00 price objective (up from $430.00) on shares of Broadcom in a report on Thursday, May 14th. TD Cowen reaffirmed a "buy" rating and set a $500.00 price target (up from $405.00) on shares of Broadcom in a research report on Friday, May 15th. Royal Bank Of Canada reduced their price target on shares of Broadcom from $370.00 to $340.00 and set a "sector perform" rating on the stock in a research report on Monday, March 2nd. Truist Financial increased their price objective on shares of Broadcom from $510.00 to $545.00 and gave the stock a "buy" rating in a research note on Thursday, March 5th. Finally, UBS Group restated a "buy" rating and set a $490.00 target price (up from $475.00) on shares of Broadcom in a report on Monday, May 18th. One investment analyst has rated the stock with a Strong Buy rating, twenty-seven have issued a Buy rating and four have assigned a Hold rating to the stock. According to MarketBeat.com, the stock has an average rating of "Moderate Buy" and an average price target of $455.07.

More Broadcom News

Here are the key news stories impacting Broadcom this week:

• Positive Sentiment: Broadcom beat fiscal Q2 expectations, reporting adjusted EPS of $2.44 versus the $2.40 consensus and revenue of $22.19 billion versus $22.13 billion expected. Broadcom Inc. Announces Second Quarter Fiscal Year 2026 Financial Results and Quarterly Dividend
• Positive Sentiment: AI semiconductor revenue more than doubled to $10.8 billion, showing Broadcom is benefiting from surging demand for custom AI accelerators and AI networking. Broadcom Revenue Climbs on AI Chip Demand
• Positive Sentiment: The company guided third-quarter revenue to about $29.4 billion, above the consensus estimate of roughly $28.3 billion, suggesting continued momentum in the AI build-out. Broadcom Inc. Announces Second Quarter Fiscal Year 2026 Financial Results and Quarterly Dividend
• Neutral Sentiment: Broadcom also announced its quarterly dividend of $0.65 per share, which supports the stock’s income appeal but is not likely the main driver of today’s move. Broadcom Inc. Announces Second Quarter Fiscal Year 2026 Financial Results and Quarterly Dividend
• Negative Sentiment: Despite strong AI growth, shares fell in after-hours trading because the outlook for AI semiconductor revenue and near-term expectations did not fully meet the market’s lofty bar after a big run-up in the stock. Broadcom revenue hits record on AI chip surge but outlook disappoints

About Broadcom

Broadcom Inc NASDAQ: AVGO is a global technology company that designs, develops and supplies semiconductor and infrastructure software solutions for a broad range of markets. The company's semiconductor business provides components and systems for wired and wireless communications, enterprise and cloud storage, networking and broadband access, serving original equipment manufacturers, cloud service providers, telecommunications carriers and industrial customers worldwide. Broadcom is headquartered in Irvine, California, and operates globally with research, development and sales organizations across North America, Europe and Asia.

On the semiconductor side, Broadcom's portfolio includes system-on-chip (SoC) and application-specific integrated circuit (ASIC) solutions, radio-frequency and connectivity components, Ethernet switching and PHY devices, storage adapters and controllers, optical transceivers and other networking silicon.

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