TLDR
- Broadcom posted record Q2 FY2026 revenue of $22.2 billion, up 48% year over year
- AI semiconductor revenue hit $10.8 billion, up 143% year over year
- Q3 AI revenue guidance of $16 billion came in just below Wall Street expectations
- Broadcom maintained its $100 billion FY2027 AI chip forecast rather than raising it
- Wall Street holds a Moderate Buy consensus with an average price target of $493.24
Broadcom posted record fiscal second-quarter revenue of $22.2 billion, a 48% jump from a year ago. Adjusted EBITDA rose 52% to $15.2 billion, and free cash flow climbed 60% to $10.3 billion. The numbers were strong — just not strong enough.
The stock sold off after earnings because Broadcom’s quarterly revenue came in slightly below Wall Street estimates. Its Q3 AI revenue forecast of $16 billion also landed just under consensus. The company held its $100 billion FY2027 AI chip forecast steady rather than raising it, which is what investors had been hoping for.
That’s the tricky part about owning a high-growth stock. The bar keeps moving higher.
AI Revenue Is the Engine Now
Broadcom’s AI semiconductor business generated $10.8 billion in Q2, up 143% year over year. Management is guiding for $16 billion in AI revenue in Q3, which would represent growth of more than 200%.
The business is built around custom AI accelerators and networking equipment. Large cloud companies are working with Broadcom to design chips tailored to their own workloads, reducing dependence on Nvidia while cutting the cost of running large AI systems. Broadcom handles the process of turning those designs into chips that can actually be manufactured at scale, and also supplies the networking technology that connects thousands of processors inside AI data centers.
The $100 billion FY2027 AI forecast still stands. That number alone shows how fast this part of the business has grown.
VMware Adds Stability
Broadcom’s infrastructure software division brought in $7.18 billion in quarterly revenue. The division is anchored by VMware, which Broadcom has reshaped around subscriptions and private cloud for larger enterprise customers.
That recurring revenue stream helps smooth out the chip cycle. It also generates strong margins. The tradeoff is that some VMware customers have pushed back on higher prices and fewer licensing choices, which creates a risk of losing ground to competing platforms.
Broadcom also locked in a deal with Apple earlier this year. Apple agreed to spend more than $30 billion on Broadcom radio-frequency chips through 2031. That deal matters because investors had been watching closely to see whether Apple would swap out more Broadcom parts for its own in-house chips. The new agreement answers that question — at least for now.
What Analysts Think
Wall Street is still broadly positive. Based on 33 analysts tracked by MarketBeat, Broadcom carries a Moderate Buy consensus with 28 Buy ratings, 4 Hold ratings, and no Sell ratings.
The average 12-month price target sits at $493.24, which implies around 23% upside from recent levels.
The post-earnings selloff reflects the reality of Broadcom’s valuation rather than a change in the underlying business. At these multiples, anything less than a beat-and-raise quarter tends to get punished.
Broadcom’s next quarterly report will be the next real test of whether its AI revenue trajectory can keep satisfying a demanding market.
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