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For the second quarter of fiscal 2026, AVGO expects revenues of $22 billion, indicating 47% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $22.04 billion, suggesting growth of 46.9% from the year-ago quarter’s reported figure.
The consensus mark for earnings has been unchanged at $2.40 per share over the past 30 days, indicating 52% growth from the figure reported in the year-ago quarter.
Consensus Earnings Trend
Image Source: Zacks Investment Research
Broadcom’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 1.93%.
Let us see how things have shaped up for AVGO shares prior to this announcement.
Factors to Note Prior to Broadcom’s Q2 Earnings
Broadcom’s fiscal second-quarter performance is expected to have benefited from its expanding AI offerings. AI revenues are expected to jump 140% year over year to $10.7 billion, thanks to strong demand for custom AI accelerators (XPUs), which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models. XPU revenues surged 140% year over year in the fiscal first quarter, and the momentum is expected to have continued in the fiscal second quarter.
Broadcom’s semiconductor revenues are expected to have benefited from strong AI networking revenues that are anticipated to have accounted for 40% of total AI revenues. AVGO’s latest 102-terabit per second Tomahawk 6 switch, as well as 200G SerDes, are capturing demand from hyperscalers. Broadcom’s current order backlog for AI switches exceeds $10 billion. Non-AI semiconductor revenues are expected to be approximately $4.1 billion, up 4% year over year.
Broadcom expects semiconductor revenues to jump 76% year over year to $14.8 billion in the second quarter of fiscal 2026. Infrastructure Software revenues are expected to be $7.2 billion, up 9% year over year, driven by strong demand for infrastructure software.
However, AVGO expects gross margin to be flat sequentially at 77% and adjusted EBITDA of roughly 68%.
AVGO Shares Outperform Sector
AVGO shares have returned 29.1% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 21.3%. The company has underperformed peers, including Cisco Systems (CSCO - Free Report) , Hewlett Packard Enterprise (HPE - Free Report) and Marvell Technology (MRVL - Free Report) , YTD. Shares of Cisco Systems, Hewlett Packard Enterprise and Marvell Technology have returned 56.4%, 79.2% and 141.3%, respectively, over the same timeframe.
AVGO Stock’s Price Performance
Image Source: Zacks Investment Research
The AVGO stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of the forward 12-month price/earnings (P/E), Broadcom shares are trading at 29.35X, higher than the sector’s 26.34X, Cisco’s 26.78X and Hewlett Packard Enterprise’s 16.73X but lower than Marvell’s 46.97X.
AVGO Stock’s Valuation
Image Source: Zacks Investment Research
Strong AI Portfolio Aids Broadcom’s Long-Term Prospects
Broadcom’s AI momentum is expected to continue, thanks to a clientele that includes Google, Meta Platforms and Anthropic. The company continues to gain market share in AI networking, driven by the first-to-market Tomahawk 6 switch at 100 terabit per second, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers. Tomahawk 6 doubles the throughput of its predecessor, Tomahawk 5, and is highly optimized for scale-out and scale-up AI networks used for training and inference. Tomahawk 6 provides one of the industry’s most comprehensive sets of AI routing capabilities and interconnect options, built to handle the demand of AI clusters scaling beyond one million custom accelerators (XPUs).
New products like 3.5D XPU, 102.4T Ethernet switches with co-packaged optics, 400G/lane optical DSPs, 200G/lane Ethernet retimers and AECs, and PCIe Gen6 connectivity solutions are expected to drive growth. Broadcom’s Symantec CBX (Carbon Black XDR) is a cloud-based platform that combines Symantec’s robust prevention, Adaptive Protection, Data Security, Cloud SWG and Incident Prediction features with Carbon Black’s EDR technology for deep visibility, exceptional threat detection and rapid response across attack surfaces.
Broadcom’s semiconductor business gets a boost with the latest launch of the BCM68850, a SoC, which is the industry’s first 50G ITU-PON home gateway chipset with an integrated neural processing unit (NPU) and native Wi-Fi 8 compatibility. The company is pairing 50G PON with Wi-Fi 8 readiness and post-quantum cryptography that strengthens Broadcom’s share in fiber broadband gateways as operators prepare for AI-intensive consumer applications and next-generation Wi-Fi deployments. The BCM68850 materially strengthens AVGO’s AI narrative by extending its AI infrastructure strategy from hyperscale data centers to the broadband edge, creating a new semiconductor growth vector alongside its booming XPU business.
While Broadcom’s near-term AI revenue surge is driven primarily by XPUs and networking silicon, the BCM68850 expands the company’s AI opportunity into edge infrastructure, broadband gateways and intelligent consumer networking equipment. That broadening of the AI portfolio supports management’s confidence in sustained semiconductor growth and its projection that AI chip revenues could exceed $100 billion in 2027.
Conclusion
Broadcom’s strong portfolio reflects solid top-line growth potential over the long run. However, gross margin remains under pressure, and a stretched valuation makes the stock a risky bet ahead of second-quarter fiscal 2026 results.
View the Zacks #1 Rank List
Image: Bigstock
AVGO Set to Report Q2 Earnings: Buy, Sell or Hold Broadcom Stock?
Key Takeaways
Broadcom (AVGO - Free Report) is set to report its second-quarter fiscal 2026 results on June 3.
For the second quarter of fiscal 2026, AVGO expects revenues of $22 billion, indicating 47% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $22.04 billion, suggesting growth of 46.9% from the year-ago quarter’s reported figure.
The consensus mark for earnings has been unchanged at $2.40 per share over the past 30 days, indicating 52% growth from the figure reported in the year-ago quarter.
Consensus Earnings Trend
Image Source: Zacks Investment Research
Broadcom’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 1.93%.
Broadcom Inc. Price and EPS Surprise
Broadcom Inc. price-eps-surprise | Broadcom Inc. Quote
Let us see how things have shaped up for AVGO shares prior to this announcement.
Factors to Note Prior to Broadcom’s Q2 Earnings
Broadcom’s fiscal second-quarter performance is expected to have benefited from its expanding AI offerings. AI revenues are expected to jump 140% year over year to $10.7 billion, thanks to strong demand for custom AI accelerators (XPUs), which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models. XPU revenues surged 140% year over year in the fiscal first quarter, and the momentum is expected to have continued in the fiscal second quarter.
Broadcom’s semiconductor revenues are expected to have benefited from strong AI networking revenues that are anticipated to have accounted for 40% of total AI revenues. AVGO’s latest 102-terabit per second Tomahawk 6 switch, as well as 200G SerDes, are capturing demand from hyperscalers. Broadcom’s current order backlog for AI switches exceeds $10 billion. Non-AI semiconductor revenues are expected to be approximately $4.1 billion, up 4% year over year.
Broadcom expects semiconductor revenues to jump 76% year over year to $14.8 billion in the second quarter of fiscal 2026. Infrastructure Software revenues are expected to be $7.2 billion, up 9% year over year, driven by strong demand for infrastructure software.
However, AVGO expects gross margin to be flat sequentially at 77% and adjusted EBITDA of roughly 68%.
AVGO Shares Outperform Sector
AVGO shares have returned 29.1% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 21.3%. The company has underperformed peers, including Cisco Systems (CSCO - Free Report) , Hewlett Packard Enterprise (HPE - Free Report) and Marvell Technology (MRVL - Free Report) , YTD. Shares of Cisco Systems, Hewlett Packard Enterprise and Marvell Technology have returned 56.4%, 79.2% and 141.3%, respectively, over the same timeframe.
AVGO Stock’s Price Performance
Image Source: Zacks Investment Research
The AVGO stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of the forward 12-month price/earnings (P/E), Broadcom shares are trading at 29.35X, higher than the sector’s 26.34X, Cisco’s 26.78X and Hewlett Packard Enterprise’s 16.73X but lower than Marvell’s 46.97X.
AVGO Stock’s Valuation
Image Source: Zacks Investment Research
Strong AI Portfolio Aids Broadcom’s Long-Term Prospects
Broadcom’s AI momentum is expected to continue, thanks to a clientele that includes Google, Meta Platforms and Anthropic. The company continues to gain market share in AI networking, driven by the first-to-market Tomahawk 6 switch at 100 terabit per second, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers. Tomahawk 6 doubles the throughput of its predecessor, Tomahawk 5, and is highly optimized for scale-out and scale-up AI networks used for training and inference. Tomahawk 6 provides one of the industry’s most comprehensive sets of AI routing capabilities and interconnect options, built to handle the demand of AI clusters scaling beyond one million custom accelerators (XPUs).
New products like 3.5D XPU, 102.4T Ethernet switches with co-packaged optics, 400G/lane optical DSPs, 200G/lane Ethernet retimers and AECs, and PCIe Gen6 connectivity solutions are expected to drive growth. Broadcom’s Symantec CBX (Carbon Black XDR) is a cloud-based platform that combines Symantec’s robust prevention, Adaptive Protection, Data Security, Cloud SWG and Incident Prediction features with Carbon Black’s EDR technology for deep visibility, exceptional threat detection and rapid response across attack surfaces.
Broadcom’s semiconductor business gets a boost with the latest launch of the BCM68850, a SoC, which is the industry’s first 50G ITU-PON home gateway chipset with an integrated neural processing unit (NPU) and native Wi-Fi 8 compatibility. The company is pairing 50G PON with Wi-Fi 8 readiness and post-quantum cryptography that strengthens Broadcom’s share in fiber broadband gateways as operators prepare for AI-intensive consumer applications and next-generation Wi-Fi deployments. The BCM68850 materially strengthens AVGO’s AI narrative by extending its AI infrastructure strategy from hyperscale data centers to the broadband edge, creating a new semiconductor growth vector alongside its booming XPU business.
While Broadcom’s near-term AI revenue surge is driven primarily by XPUs and networking silicon, the BCM68850 expands the company’s AI opportunity into edge infrastructure, broadband gateways and intelligent consumer networking equipment. That broadening of the AI portfolio supports management’s confidence in sustained semiconductor growth and its projection that AI chip revenues could exceed $100 billion in 2027.
Conclusion
Broadcom’s strong portfolio reflects solid top-line growth potential over the long run. However, gross margin remains under pressure, and a stretched valuation makes the stock a risky bet ahead of second-quarter fiscal 2026 results.
AVGO currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.