Broadcom Posts 48% Revenue Surge but Post-Earnings Sell-Off Follows Tempered AI Guidance

Broadcom reported fiscal second-quarter revenue of $22.19 billion, a 48% increase year over year, but shares fell in after-hours trading after CEO Hock Tan stopped short of raising the company's multiyear AI revenue targets — a signal Wall Street had been counting on.

Adjusted earnings per share climbed 54% to $2.44, topping the consensus estimate of $2.40, according to data compiled by LSEG. Adjusted EBITDA rose 52% to $15.24 billion, beating the FactSet consensus of $15.06 billion. Total revenue came in just below the $22.27 billion analyst forecast.

Within the Semiconductor Solutions segment, revenue rose 78.5% — accelerating from 52.4% growth a year ago — to $15 billion, exceeding expectations of $14.7 billion. AI semiconductor revenue surged 143% year over year to $10.8 billion, up from 106% growth in the prior period.

Tan reiterated expectations of delivering $56 billion in AI semiconductor revenue for fiscal year 2026, and maintained his target of at least $100 billion in fiscal year 2027. He also indicated that AI semiconductor growth would continue into fiscal 2028, driven by activity with six core customers — Alphabet, Anthropic, OpenAI, Meta Platforms, and two undisclosed parties.

In April, Broadcom entered into a long-term agreement with Google to develop and supply multiple generations of tensor processing units and AI networking. That same month, the company struck a deal with Anthropic to supply an additional 5 gigawatt of next-generation TPU-based compute beginning in 2027.

With OpenAI, Broadcom has a contractual commitment to deploy 1.3 gigawatt of compute in 2027 as part of a larger 10 gigawatt by 2029 arrangement. With Meta, the company expects to deploy 3 gigawatt of compute capacity through the end of 2028. The two unnamed customers have submitted purchase orders totaling $6 billion, with shipments expected to begin in late 2026 and accelerate in 2027.

Tan also disclosed that Broadcom is forming an AI special purpose vehicle with alternative asset managers Apollo and Blackstone, which will provide debt financing to facilitate chip sales — addressing questions about how frontier AI labs will fund large-scale compute deployments.

The company booked more than $30 billion of AI semiconductor orders during the quarter, well above the $10.8 billion it recorded in revenue, underscoring the depth of near-term demand.

For the third fiscal quarter, Broadcom guided for total revenue of approximately $29.4 billion, above the $28.54 billion consensus. AI revenue is projected to grow more than 200% year over year to $16 billion, up from $10.8 billion — though some analysts had been modeling closer to $17 billion.

Infrastructure Software revenue of $7.18 billion fell short of the $7.32 billion Wall Street expected, marking the second consecutive quarter in which that segment missed estimates.

Tan acknowledged on the call that competitors could win some designs in Google's custom chip and AI program, which weighed on sentiment even as the broader customer relationship remains intact.

With the stock having risen more than 80% over the past year, the bar for a sustained post-earnings rally was high. A third-quarter AI revenue guide that fell short of the most optimistic projections, combined with no new customer announcements, was enough to push shares lower despite underlying results that analysts described as solid.

Whether the sell-off proves to be a recalibration or a longer-term reset will depend heavily on whether Broadcom's pipeline of committed orders translates into accelerating revenue in the second half of fiscal 2026 and beyond.

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