We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Higher Semiconductor Revenues Help AVGO Stock Beat Q1 Earnings?
Read MoreHide Full Article
Key Takeaways
AVGO is set to report Q1 FY26 results, with AI revenues expected to double to $8.2B.
Broadcom expects semiconductor revenues to jump 50% to $12.3B on XPU and networking demand.
AVGO expects infrastructure software revenues to rise 2% as VMware shifts to subscriptions and VCF gains.
Broadcom’s (AVGO - Free Report) first-quarter fiscal 2026 results, set to be reported on March 4, are expected to reflect the benefits of expanding AI offerings. AVGO’s Semiconductor segment revenues are anticipated to have benefited from strong demand for custom AI accelerators (XPUs), which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models.
AI revenues jumped 74% year over year to $6.5 billion in the fourth quarter of fiscal 2025. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 6 products, as well as the Jericho 4 Ethernet fabric router. AI revenues are expected to double year over year to $8.2 billion. Broadcom expects semiconductor revenues to jump 50% year over year to $12.3 billion in the first quarter of fiscal 2026. The Zacks Consensus Estimate for Broadcom’s Semiconductor revenues is pegged at $12.11 billion, indicating growth of 47.5% from the figure reported in the year-ago quarter.
Click here to learn how AVGO’s overall fiscal first-quarter performance is likely to have been.
AVGO’s Infrastructure Software to Benefit From VMware
VMware’s growing traction is expected to have driven the Infrastructure Software segment’s revenue growth in the fiscal first quarter. Broadcom’s focus on shifting VMware products to a subscription-based model and growing adoption of VMware Cloud Foundation (VCF), which is anticipated to have aided top-line growth in the to-be-reported quarter.
AVGO expects infrastructure software revenues to be approximately $6.8 billion, up 2% year over year. The Zacks Consensus Estimate for Infrastructure Software revenues is pegged at $7.039 billion, indicating 5% year-over-year growth.
Lower-Margin XPUs to Hurt AVGO’s Gross Margin
Although Broadcom has been benefiting from higher sales of XPUs, these lower-margin solutions are expected to impact the gross margin negatively. AVGO forecasts the gross margin to decline 100 basis points (bps) sequentially. Broadcom expects an adjusted EBITDA margin of 67% in the fiscal fourth quarter, suggesting an 80-bps decline on a sequential basis.
The Zacks Consensus Estimate for Semiconductor’s operating income is pegged at $7.084 billion, indicating 50.5% growth from the figure reported in the year-ago quarter. The consensus mark for Infrastructure Software operating income is pegged at $5.408 billion, implying 5.6% growth from the figure reported in the year-ago quarter.
Long-term earnings growth for Advanced Energy Industries, Seagate and Western Digital is pegged at 19.36%, 38% and 51.1%, respectively. In terms of share price movement, Advanced Energy Industries, Seagate and Western Digital have appreciated 217.9%, 303.4% and 505.1%, respectively, outperforming AVGO’s return of 70% in a year.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Will Higher Semiconductor Revenues Help AVGO Stock Beat Q1 Earnings?
Key Takeaways
Broadcom’s (AVGO - Free Report) first-quarter fiscal 2026 results, set to be reported on March 4, are expected to reflect the benefits of expanding AI offerings. AVGO’s Semiconductor segment revenues are anticipated to have benefited from strong demand for custom AI accelerators (XPUs), which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models.
AI revenues jumped 74% year over year to $6.5 billion in the fourth quarter of fiscal 2025. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 6 products, as well as the Jericho 4 Ethernet fabric router. AI revenues are expected to double year over year to $8.2 billion. Broadcom expects semiconductor revenues to jump 50% year over year to $12.3 billion in the first quarter of fiscal 2026. The Zacks Consensus Estimate for Broadcom’s Semiconductor revenues is pegged at $12.11 billion, indicating growth of 47.5% from the figure reported in the year-ago quarter.
Click here to learn how AVGO’s overall fiscal first-quarter performance is likely to have been.
Broadcom Inc. Revenue (TTM)
Broadcom Inc. revenue-ttm | Broadcom Inc. Quote
AVGO’s Infrastructure Software to Benefit From VMware
VMware’s growing traction is expected to have driven the Infrastructure Software segment’s revenue growth in the fiscal first quarter. Broadcom’s focus on shifting VMware products to a subscription-based model and growing adoption of VMware Cloud Foundation (VCF), which is anticipated to have aided top-line growth in the to-be-reported quarter.
AVGO expects infrastructure software revenues to be approximately $6.8 billion, up 2% year over year. The Zacks Consensus Estimate for Infrastructure Software revenues is pegged at $7.039 billion, indicating 5% year-over-year growth.
Lower-Margin XPUs to Hurt AVGO’s Gross Margin
Although Broadcom has been benefiting from higher sales of XPUs, these lower-margin solutions are expected to impact the gross margin negatively. AVGO forecasts the gross margin to decline 100 basis points (bps) sequentially. Broadcom expects an adjusted EBITDA margin of 67% in the fiscal fourth quarter, suggesting an 80-bps decline on a sequential basis.
The Zacks Consensus Estimate for Semiconductor’s operating income is pegged at $7.084 billion, indicating 50.5% growth from the figure reported in the year-ago quarter. The consensus mark for Infrastructure Software operating income is pegged at $5.408 billion, implying 5.6% growth from the figure reported in the year-ago quarter.
Zacks Rank and Stocks to Consider
AVGO currently has a Zacks Rank #3 (Hold).
Advanced Energy Industries (AEIS - Free Report) , Seagate (STX - Free Report) and Western Digital (WDC - Free Report) are some better-ranked stocks in the broader Zacks Computer and Technology sector. All three stocks currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Advanced Energy Industries, Seagate and Western Digital is pegged at 19.36%, 38% and 51.1%, respectively. In terms of share price movement, Advanced Energy Industries, Seagate and Western Digital have appreciated 217.9%, 303.4% and 505.1%, respectively, outperforming AVGO’s return of 70% in a year.