Markets AVGO JUN 07, 2026

Broadcom prints record $22.2B quarter, AVGO falls 15% as Tan holds AI line at $100B

Q2 AI semi revenue grew 143% to $10.8B and Q3 guidance of $29.4B beat the Street — but Hock Tan declined to lift the FY27 $100B AI target.

BY HENLEY MARRAST · MARKETS DESK

Broadcom reported $22.19 billion in fiscal Q2 revenue, up 48% year over year, and AVGO promptly fell roughly 15% on Thursday. The number that’s supposed to matter most, AI semiconductor revenue, grew 143% to $10.8 billion. The number the market apparently wanted, a raise to the fiscal 2027 AI target, didn’t come.

CEO Hock Tan instead reiterated the line he set last quarter: “We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion.” In a tape priced for sequential upside surprises, reiterate is a four-letter word.

The quarter itself was, by any pre-2024 standard, extraordinary. Non-GAAP diluted EPS of $2.44, GAAP EPS of $1.91, adjusted EBITDA of $15.24 billion at 69% of revenue, free cash flow of $10.26 billion on just $231 million of capex. Q3 revenue guidance of $29.4 billion implies an 84% year-over-year jump and beat Street consensus of $28.53 billion, with AI semi guided above $16.0 billion (more than 200% growth) and software at roughly $8.9 billion, up 31%. Full-year fiscal 2026 AI semi was reaffirmed at $56 billion, roughly 180% growth.

Underneath the headline, the order book tells the story Tan is managing carefully. AI semiconductor bookings exceeded $30 billion in the quarter, with networking now nearly 40% of AI semi revenue. Six core custom-chip accounts (Google, Meta, OpenAI, Anthropic and two unnamed others) anchor the franchise, and an additional $6 billion in AI orders booked from two further customers. Tan also flagged a 20-gigawatt compute build-out with Apollo and Blackstone, an initial $35 billion tranche led by Apollo.

Software did $7.2 billion, up 9%, with ARR up 17%. Non-AI semis came in at $4.2 billion, up 6%, with bookings above $6 billion. Gross margin of 77.1% compressed 230 basis points year over year as custom silicon mix rose. The dividend held at $0.65.

The structural read is that Broadcom is now a stock where beating consensus by nearly a billion isn’t the catalyst. The catalyst is whether Tan repaints the FY27 ceiling. He didn’t, and the buyside repriced its own assumptions instead.

Sources

About the author

Henley Marrast

MARKETS DESK

Henley Marrast covers AI-equity flow, accelerator demand, and earnings prints for AI Sheet Report. She leads coverage of the public AI complex from the New York markets desk, with a focus on the daily tape and quarterly results. She has been writing about technology markets for several years.