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Elephant.EarningsElephant Earnings specializes in sharp and insightful earnings report analysis. With a focus on uncovering the truth behind the numbers
03 Jun 2026$AVGO Broadcom reported second quarter fiscal 2026 revenue of $22.19 billion, up 48% year over year, while adjusted earnings reached $2.44 per share, ahead of expectations of $2.40 per share. Revenue came in slightly below analyst forecasts of $22.27 billion, contributing to a 3% decline in the stock. The key catalyst was AI infrastructure demand, as Broadcom continued to benefit from growing deployments across data centers, networking platforms, and custom AI silicon. The results reinforce earnings momentum while highlighting the market sensitivity to execution against elevated expectations.
The standout metric was the companys AI semiconductor business. Broadcom generated $10.8 billion in AI chip revenue during the quarter, representing 143% growth from the prior year period. AI semiconductors remain the primary growth engine for the company as hyperscale customers expand spending on AI infrastructure. The scale of this growth supports continued institutional flows into AI-linked semiconductor leaders and strengthens the case for further multiple expansion if demand trends remain intact.
Profitability remained exceptionally strong. Adjusted EBITDA reached $15.2 billion, equal to 69% of revenue, while free cash flow totaled $10.3 billion, or approximately 46% of revenue. These figures demonstrate Broadcoms ability to maintain high margins and significant cash generation even as industry investment in AI infrastructure continues to accelerate. The combination of rapid revenue growth and sustained profitability reinforces the companys competitive positioning within the AI supply chain.
For the third quarter, Broadcom issued a significantly stronger outlook. The company expects revenue of approximately $29.4 billion, representing 84% growth from the comparable period last year, and projects AI semiconductor revenue to increase more than 200% year over year to roughly $16 billion. Broadcom also expects adjusted operating margin of 67% and adjusted EBITDA margin of 68% in the quarter. The guidance indicates that the company is not only capturing accelerating AI demand but also preserving a highly profitable operating structure as growth scales.
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