Custom AI chip giant Broadcom published its fiscal 2026 second-quarter results on June 3 local time, reporting revenue of $22.187 billion for the quarter ended May 3—a 48% year-over-year increase but slightly below the market consensus of $22.27 billion—and the company's stock fell more than 13% in after-hours trading. The revenue miss and third-quarter AI semiconductor guidance of $16 billion, below market expectations of $17.2 billion, triggered the decline. Broadcom, a leader in application-specific integrated circuits (ASICs), provides intellectual property and critical technologies for AI chips to major tech companies, positioning it as a key beneficiary of surging AI infrastructure spending.
Broadcom Reports Record Q2 Revenue and Profit
For the quarter ended May 3, Broadcom recorded U.S. GAAP net profit of $9.31 billion, an 88% year-over-year increase, and non-GAAP diluted earnings per share of $2.44, up 54% year-over-year and above the market consensus of $2.40. President and CEO Hock Tan stated: "Driven by accelerating revenue growth in our AI semiconductor business and strong operating leverage, Broadcom achieved record revenue, operating profit, and free cash flow in the second quarter. Semiconductor revenue from AI business reached $10.8 billion, up 143% year-over-year, exceeding our expectations. This was primarily due to continued growth in customer demand for custom AI accelerators and AI networking products."
Company Issues Q3 Revenue Guidance Above Consensus
Broadcom projected third-quarter revenue of $29.4 billion, an 84% year-over-year increase, above the market consensus of $28.6 billion, with an adjusted profit margin of 67%. Hock Tan noted: "This growth momentum continues. We expect third-quarter AI semiconductor revenue to reach $16 billion, up more than 200% year-over-year." However, the market had expected Broadcom's third-quarter AI semiconductor revenue to reach $17.2 billion. On June 3, Broadcom's Nasdaq stock closed down 0.49% at $479.23 per share, with a total market capitalization of $2.27 trillion. Year-to-date, the stock has risen nearly 38%. After the earnings release, the stock dropped more than 13% in after-hours trading.
AI Semiconductor Revenue Grows 143% Year-Over-Year in Q2
By business segment, Broadcom's second-quarter semiconductor business revenue was $15.009 billion, up 79% year-over-year and accounting for 68% of total revenue, above the market consensus of $14.72 billion. Infrastructure software revenue was $7.178 billion, up 9% year-over-year and accounting for 32% of total revenue, below the market consensus of $7.32 billion. Despite continued progress in transforming into an AI supplier, Broadcom faces high investor expectations. Hock Tan stated that for the company's fiscal 2026 ending in October this year, AI chip sales are expected to reach $56 billion—below the market consensus of $57.6 billion.
CEO Discloses Six Core Custom Chip Clients and Order Backlog
Hock Tan stated during the earnings call that Broadcom has six core custom chip clients, including Google, Meta, Anthropic, and OpenAI. While the company's AI semiconductor revenue in the quarter was $10.8 billion, orders in this field have already exceeded $30 billion. In the March earnings call, Hock Tan had stated that the company expected AI chip sales to exceed $100 billion next year. With the latest earnings release, the company did not raise this figure. Hock Tan only stated that the company would "very easily" exceed that expectation and projected AI semiconductor revenue would continue to grow through fiscal 2028. Hock Tan also noted that Broadcom "only provides chips" rather than complete integrated AI systems to customers. He stated: "Current bookings are not for immediate delivery. Customers want some orders delivered as soon as possible, but they all understand they need to arrange many other matters before delivery." Hock Tan also stated that despite "very significant" long-term contract commitments between the parties, Broadcom's core major customer Google is seeking to diversify its chip suppliers, which Broadcom had "anticipated all along."
Broadcom Announces Multi-Gigawatt Compute Deployment Plans with Partners
Broadcom disclosed a series of compute deployment plans with partners alongside the earnings release. The company is currently participating in a debt financing transaction of approximately $36 billion. According to sources, Apollo Global Management and private equity firm Blackstone are jointly providing financing to Anthropic to help cover the cost of purchasing Google AI chips (TPU). Broadcom participated in developing these chips and will assume partial payment guarantee responsibility in the transaction. Hock Tan stated that the platform Broadcom created with these two investment firms will support not only Anthropic but also its competitor OpenAI, meeting growing AI compute demand. Under this collaboration, the plan is to cumulatively deploy more than 20 gigawatts (GW) of computing capacity by 2028. Regarding OpenAI, Hock Tan revealed that Broadcom has begun delivering AI chips to OpenAI and expects to enter formal mass production later this year. Under the agreement previously reached between the parties, Broadcom will deploy 1.3 gigawatts of computing capacity for OpenAI in 2027, with a total target of deploying 10 gigawatts of computing infrastructure by 2029. Additionally, Broadcom will deploy 3 gigawatts of computing capacity for Meta by the end of 2028, with the first batch of 1-gigawatt orders set to begin delivery in the second half of next year. Hock Tan stated that the collaboration with Meta covers two major product categories: AI accelerator chips and networking chips.
FAQ
What were Broadcom's Q2 fiscal 2026 results announced on June 3?
Broadcom reported revenue of $22.187 billion for the quarter ended May 3, a 48% year-over-year increase but slightly below the market consensus of $22.27 billion. GAAP net profit was $9.31 billion, up 88% year-over-year, and non-GAAP diluted earnings per share was $2.44, up 54% year-over-year and above the consensus of $2.40.
Why did Broadcom's stock fall more than 13% in after-hours trading on June 3?
The stock declined because Broadcom's Q2 revenue slightly missed the market consensus of $22.27 billion, and the company's third-quarter AI semiconductor revenue guidance of $16 billion fell below market expectations of $17.2 billion, despite overall Q3 revenue guidance of $29.4 billion exceeding the consensus of $28.6 billion.
