Broadcom Earnings Miss as AI Revenue Doubles

Broadcom Inc. (Nasdaq: AVGO) reported fiscal Q2 2026 earnings in a press release on June 3, 2026, showing revenue below Wall Street consensus despite AI-related semiconductor revenue more than doubling year over year. Investors are now focused on the company’s near-term guidance and demand from hyperscale cloud customers.

Q2 Revenue and AI Momentum

The company disclosed total revenue for the quarter ended May 3, 2026, along with GAAP and non-GAAP net income, diluted earnings per share, adjusted EBITDA, and an adjusted EBITDA margin. Within the Semiconductor Solutions segment, Broadcom highlighted AI-related hardware revenue, which more than doubled compared with the prior year.

Management attributed this growth primarily to orders from hyperscale cloud customers for custom AI accelerators (XPUs) and AI networking silicon. These products are driving momentum in the semiconductor segment heading into the summer selling season.

The Infrastructure Software segment, which includes VMware and other software assets, remained largely subscription and maintenance based. This contributed to recurring revenue and helped stabilize margins amid hardware cyclicality.

Q3 Guidance and Investor Focus

Broadcom issued quantitative guidance for fiscal Q3 2026, including total revenue and an adjusted EBITDA margin target. Management expects continued growth in AI-driven semiconductor sales, supported by demand from hyperscale cloud providers.

The board declared a quarterly cash dividend and reaffirmed the company’s commitment to returning cash to shareholders through dividends and share repurchases. The release also detailed operating cash flow, free cash flow, and capital returned during the quarter, emphasizing ongoing cash generation alongside the capital-return program.

Shares traded lower after the release, with market commentary framing the quarter as a revenue shortfall versus consensus. Investor attention has shifted to whether near-term bookings from hyperscalers will sustain the company’s top-line and margin performance as implied by the guidance.

For context, Broadcom reported fiscal Q1 2026 revenue of $19.3 billion, up about 29.5% year over year, and non-GAAP EPS of $2.05. Semiconductor Solutions revenue was roughly $12.5 billion, and Infrastructure Software about $6.8 billion. Management had entered Q2 with a revenue target of $22 billion and a 68% adjusted EBITDA margin.

Investors will be closely watching management’s remarks and responses in upcoming reports and the earnings call to assess whether hyperscale AI demand and the Q3 outlook can maintain the company’s recent growth and cash-return trajectory.