A month has gone by since the last earnings report for Broadcom Inc. (AVGO Quick QuoteAVGO - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Broadcom Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Broadcom Q1 Earnings Beat Estimates, Revenues Up Y/Y

Broadcom reported first-quarter fiscal 2026 non-GAAP earnings of $2.05 per share, beating the Zacks Consensus Estimate by 0.99% and jumping 28.1% year over year. 

Revenues rallied 29.5% year over year to $19.31 billion and beat the Zacks Consensus Estimate by 0.13%.

AVGO’s Q1 Details

Semiconductor solutions revenues (64.8% of net revenues) totaled $12.52 billion, up 52% year over year. The uptick was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues. Non-AI revenues were flat year over year to $4.1 billion. Enterprise networking, broadband and server storage revenues were up year over year, offset by a seasonal decline in wireless. 

Infrastructure software revenues (35.2% of net revenues) climbed 1% year over year to $6.8 billion. VMware revenues grew 13% year over year. Bookings continue to be strong, and total contract value booked in the fiscal first quarter exceeded $9.2 billion.

The non-GAAP gross margin was 77%, down 210 basis points (bps) year over year. 

Research and development expenses, as a percentage of net revenues, decreased 170 bps year over year to 7.9%. SG&A expenses, as a percentage of net revenues, decreased 90 bps to 2.7%.

Adjusted EBITDA rose 30% year over year to $13.13 billion. The adjusted EBITDA margin was 68%, up 40 bps year over year. The non-GAAP operating margin expanded 50 bps year over year to 66.4%.

AVGO’s Balance Sheet & Cash Flow

As of Feb. 1, 2026, cash and cash equivalents were $14.17 billion compared with $16.18 billion as of Nov. 2, 2025.

Total debt (including the current portion of $3.15 billion) was $66.06 billion as of Feb. 1, 2026, compared with $65.14 billion as of Nov. 2, 2025.

Broadcom generated $8.26 billion in cash flow from operations compared with $7.7 billion in the previous quarter. The free cash flow was $8.01 billion compared with $7.47 billion in the prior quarter.

On Dec. 31, 2025, AVGO paid a cash dividend of 65 cents per share, totaling $3.09 billion. During the reported quarter, Broadcom repurchased $7.8 billion or approximately 23 million shares of common stock. The company’s board authorized an additional $10 billion related to share repurchases through the end of calendar 2026.

AVGO Offers Solid Q2 Guidance

For the second quarter of fiscal 2026, Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. AI revenues are expected to surge 140% year over year to $10.7 billion, driven by strong demand for custom AI accelerators. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of total AI revenues. Non-AI revenues are expected to increase 4% year over year to $4.1 billion.

Infrastructure Software revenues are expected to be roughly $7.2 billion, up 9% year over year.  

Gross margin is expected to be flat sequentially at 77%. The adjusted EBITDA margin is expected to be 68% for the second quarter of fiscal 2026.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 8.86% due to these changes.

VGM Scores

At this time, Broadcom Inc. has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Broadcom Inc. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Broadcom Inc. belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Applied Optoelectronics (AAOI Quick QuoteAAOI - Free Report) , has gained 2.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Applied Optoelectronics reported revenues of $134.27 million in the last reported quarter, representing a year-over-year change of +33.9%. EPS of -$0.01 for the same period compares with -$0.02 a year ago.

For the current quarter, Applied Optoelectronics is expected to post a loss of $0.05 per share, indicating a change of -150% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Applied Optoelectronics. Also, the stock has a VGM Score of F.