Broadcom Inc. (NASDAQ: AVGO) reported second-quarter fiscal year 2026 financial results on June 3, 2026, with AI semiconductor revenue reaching $10.8 billion for the quarter ended May 3, 2026, a 143% increase from the prior-year period. The results came in slightly below analyst revenue estimates, and shares fell approximately 14% the following day.
Total consolidated revenue for the quarter was $22,187 million, up 48% year-over-year. Broadcom designs and supplies semiconductors and infrastructure software, competing directly with other large-scale chip designers in customised AI accelerator and networking markets alongside broader infrastructure software providers. Broadcom's quarterly results had been preceded by elevated market expectations for an increase to the company's full-year AI semiconductor revenue target.
#AI Semiconductor Revenue Reaches $10.8 Billion in Q2
The semiconductor solutions segment generated $15,009 million in the quarter, up 79% from $8,408 million in the prior-year period. AI semiconductor revenue of $10.8 billion accounted for the majority of that segment total.
Adjusted EBITDA for the quarter was $15,244 million, representing 69% of revenue, up 52% from $10,001 million in the same period a year earlier. Free cash flow was $10,262 million, equivalent to 46% of revenue.
GAAP net income was $9,310 million, compared to $4,965 million in the prior-year quarter. Non-GAAP net income was $12,074 million. GAAP diluted earnings per share were $1.91, while non-GAAP diluted EPS were $2.44.
Cash and cash equivalents at the end of the quarter were $19,628 million, up from $14,174 million at the end of the prior fiscal quarter.
#Q3 Revenue Guidance Set at $29.4 Billion
Broadcom provided third-quarter fiscal year 2026 guidance of approximately $29.4 billion in revenue, an increase of 84% from the prior-year period. The company said it expects non-GAAP operating income of approximately 67% of projected revenue and adjusted EBITDA of approximately 68% of projected revenue for Q3.
"The momentum continues and in Q3 we expect semiconductor revenue from AI to grow over 200 percent year-over-year to $16.0 billion," Hock Tan, President and CEO of Broadcom Inc., said in the earnings release.
CFO Kirsten Spears said in the same release that Q3 consolidated revenue growth is expected to increase 84% year-over-year to $29.4 billion, with non-GAAP operating margin described as stable at 67%. Spears is retiring and will be succeeded by Amie Thuener as CFO.
Tan did not raise Broadcom's full-year AI semiconductor revenue guidance, reiterating the existing target of $56 billion for fiscal 2026 and a target of more than $100 billion for fiscal 2027. The company also said it would provide chips only to customers, rather than the complete integrated AI systems it had previously indicated it would supply.
#Board Declares $0.65 Quarterly Dividend
Broadcom's board of directors declared a quarterly cash dividend of $0.65 per share, payable on June 30, 2026, to stockholders of record as of June 22, 2026. The prior quarterly dividend, paid March 31, 2026, was also $0.65 per share, totalling $3,092 million.
The infrastructure software segment, which includes the company's VMware and enterprise software portfolio, generated $7,178 million in Q2, up 9% from $6,596 million in the prior-year period. The segment's share of total revenue declined to 32% from 44% a year earlier, as semiconductor solutions grew at a faster rate.
Broadcom carries $62,655 million in long-term debt as of May 3, 2026, a legacy of its 2023 acquisition of VMware. The company generated $10,493 million in cash from operations during the quarter and spent $231 million on capital expenditures.
Shares fell approximately 14% in the session following the release as investors reacted to the absence of an upward revision to full-year AI guidance and a shift away from integrated AI system delivery. Management projected Q3 revenue of approximately $29.4 billion and AI semiconductor revenue of approximately $16.0 billion, though the company noted actual results will vary from guidance and the variations may be material. Risks to the outlook include global economic conditions, government trade restrictions, cyclicality in the semiconductor industry, customer concentration, supply chain dependencies, and ongoing obligations related to the VMware acquisition, according to the earnings release.