Broadcom Inc.

What they do

Broadcom designs, develops, and supplies a broad range of semiconductor-based solutions and infrastructure software. Its two reportable segments are Semiconductor Solutions (complex digital and mixed signal devices, network interface cards, switches, racks) and Infrastructure Software (private cloud, mainframe, cybersecurity, enterprise software, and FC SAN products). Products target enterprise and AI data centers, servers, networking, storage, broadband, and industrial applications.

Revenue drivers

• Semiconductor Solutions — Generated $15.009B in Q2 FY2026, 68% of total revenue, up 79% YoY. Includes custom AI accelerators (XPUs), Ethernet switching/routing, NICs, and optical components for AI and non-AI workloads. AI semiconductor revenue alone was $10.8B in Q2, up 143% YoY.
• Infrastructure Software — Generated $7.178B in Q2 FY2026, 32% of total revenue, up 9% YoY. Includes VMware private cloud, mainframe software, cybersecurity, and the FC SAN business. Enables modernization and optimization of private, hybrid, and edge cloud environments.

Recent performance

In Q2 FY2026 (ended May 3, 2026), Broadcom reported record revenue of $22.187B, up 48% YoY. GAAP net income was $9.310B, non-GAAP net income $12.074B. Cash from operations was $10.493B, leading to free cash flow of $10.262B (46% of revenue). Adjusted EBITDA was $15.244B, or 69% of revenue. For FY2025, annual revenue was $63.89B, net income $23.13B, diluted EPS $4.77.

Strategy

Broadcom focuses on sustained technology leadership through extensive internal R&D and strategic acquisitions (e.g., VMware). It targets category-leading solutions for AI infrastructure, including custom AI accelerators and open, standards-based Ethernet networking. The company also aims to drive operating leverage and diversified sustainable financial results across semiconductor and software segments.

Risks

• Cyclical semiconductor industry — Broadcom operates in a highly cyclical semiconductor industry undergoing profound change due to AI, with potential demand fluctuations and inventory corrections.
• Customer concentration — A significant reduction in demand or loss of one or more significant customers, especially hyperscalers for AI solutions, could adversely affect revenue.
• Supply chain dependence — Broadcom relies on a limited number of contract manufacturers and suppliers for critical materials and components; any disruption could impair product delivery and results.
• Government regulations and trade restrictions — The company is subject to various governmental regulations and trade restrictions globally, including export controls, which could impact international operations and sales.

Outlook

For Q3 FY2026, Broadcom guided revenue of approximately $29.4B, up 84% YoY, with non-GAAP operating income about 67% of projected revenue. Management expects semiconductor revenue from AI to grow over 200% YoY to $16.0B, driven by demand for custom AI accelerators and AI networking. Adjusted EBITDA is projected at roughly 68% of revenue.