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Broadcom's AI Push Boosts Semiconductor Sales: More Upside Ahead?
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Key Takeaways
AVGO AI semiconductor revenues surged 143% to $10.8B, driven by XPUs and networking demand.
Semiconductor revenues climbed 79% to a record $15B, while bookings exceeded $30B.
Broadcom expects AI semiconductor revenues to reach $16B in Q3, up more than 200% year over year.
Broadcom (AVGO - Free Report) is seeing strong momentum from rising demand for AI-focused semiconductor solutions. In the second quarter of fiscal 2026, AI semiconductor revenues jumped 143% year over year to $10.8 billion, surpassing management’s expectations. Growth was driven by strong demand for custom AI accelerators (XPUs) and networking products used in large-scale computing environments.
Semiconductor Solutions revenues climbed 79% year over year to a record $15 billion and represented 68% of total revenues. Overall revenues increased 48% to $22.18 billion. Demand remained strong throughout the quarter, with semiconductor bookings exceeding $30 billion, well above shipments. Networking products contributed nearly 40% of revenues from Broadcom’s AI-related semiconductor business, reflecting continued investment in high-performance infrastructure.
Broadcom is also benefiting from long-term partnerships with major technology companies, including Google, Anthropic, OpenAI and Meta. These agreements cover multiple generations of custom processors and networking solutions and include deployment plans extending through 2028. The partnerships have already generated billions of dollars in purchase commitments, providing greater visibility into future growth.
The company continues to strengthen its networking leadership through technologies such as high-speed Ethernet switching, SerDes, co-packaged optics and fabric solutions, including its Tomahawk and Jericho platforms. Broadcom is also preparing to launch a next-generation 200-terabit Ethernet switch to support increasingly complex computing workloads.
Broadcom expects AI semiconductor revenues to rise to approximately $16 billion in the third quarter of fiscal 2026, representing growth of more than 200% year over year. The company expects AI semiconductor revenues to double in the second half of 2026 compared with the first half, with full-year AI semiconductor revenues projected at $56 billion, an increase of approximately 180% from fiscal 2025. Broadcom anticipates this momentum will continue, guiding for AI semiconductor revenues to exceed $100 billion in 2027.
AVGO Faces Tough Competition in the Semiconductor Space
Broadcom is facing stiff competition from the likes of Advanced Micro Devices (AMD - Free Report) and NVIDIA (NVDA - Free Report) . Both Advanced Micro Devices and NVIDIA are expanding their footprint in the semiconductor space.
Advanced Micro Devices is benefiting from strong demand for EPYC processors and Instinct GPUs. In the first quarter of 2026, Data Center revenues rose 57% year over year to a record $5.8 billion, driven by cloud and enterprise adoption, expanding AI workloads and growing large-scale GPU deployments.
NVIDIA is also seeing robust AI-driven demand. In first-quarter fiscal 2027, Data Center revenues jumped 92% year over year and 21% sequentially to a record $75 billion. Growth was fueled by strong adoption of Blackwell systems and networking products, with computing revenues reaching $60 billion and networking revenues climbing to $15 billion.
Broadcom shares have increased 18.9% year to date, underperforming the broader Zacks Computer and Technology sector’s rise of 20%.
AVGO Stock Underperforms Sector
Image Source: Zacks Investment Research
The AVGO stock is trading at a premium, with a forward 12-month price/sales of 13.57X compared with the broader sector’s 6.77X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the third quarter of fiscal 2026 earnings is pegged at $3.22 per share, up 2.9% over the past 30 days, suggesting 90.5% growth from the figure reported in the year-ago quarter.
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Broadcom's AI Push Boosts Semiconductor Sales: More Upside Ahead?
Key Takeaways
Broadcom (AVGO - Free Report) is seeing strong momentum from rising demand for AI-focused semiconductor solutions. In the second quarter of fiscal 2026, AI semiconductor revenues jumped 143% year over year to $10.8 billion, surpassing management’s expectations. Growth was driven by strong demand for custom AI accelerators (XPUs) and networking products used in large-scale computing environments.
Semiconductor Solutions revenues climbed 79% year over year to a record $15 billion and represented 68% of total revenues. Overall revenues increased 48% to $22.18 billion. Demand remained strong throughout the quarter, with semiconductor bookings exceeding $30 billion, well above shipments. Networking products contributed nearly 40% of revenues from Broadcom’s AI-related semiconductor business, reflecting continued investment in high-performance infrastructure.
Broadcom is also benefiting from long-term partnerships with major technology companies, including Google, Anthropic, OpenAI and Meta. These agreements cover multiple generations of custom processors and networking solutions and include deployment plans extending through 2028. The partnerships have already generated billions of dollars in purchase commitments, providing greater visibility into future growth.
The company continues to strengthen its networking leadership through technologies such as high-speed Ethernet switching, SerDes, co-packaged optics and fabric solutions, including its Tomahawk and Jericho platforms. Broadcom is also preparing to launch a next-generation 200-terabit Ethernet switch to support increasingly complex computing workloads.
Broadcom expects AI semiconductor revenues to rise to approximately $16 billion in the third quarter of fiscal 2026, representing growth of more than 200% year over year. The company expects AI semiconductor revenues to double in the second half of 2026 compared with the first half, with full-year AI semiconductor revenues projected at $56 billion, an increase of approximately 180% from fiscal 2025. Broadcom anticipates this momentum will continue, guiding for AI semiconductor revenues to exceed $100 billion in 2027.
AVGO Faces Tough Competition in the Semiconductor Space
Broadcom is facing stiff competition from the likes of Advanced Micro Devices (AMD - Free Report) and NVIDIA (NVDA - Free Report) . Both Advanced Micro Devices and NVIDIA are expanding their footprint in the semiconductor space.
Advanced Micro Devices is benefiting from strong demand for EPYC processors and Instinct GPUs. In the first quarter of 2026, Data Center revenues rose 57% year over year to a record $5.8 billion, driven by cloud and enterprise adoption, expanding AI workloads and growing large-scale GPU deployments.
NVIDIA is also seeing robust AI-driven demand. In first-quarter fiscal 2027, Data Center revenues jumped 92% year over year and 21% sequentially to a record $75 billion. Growth was fueled by strong adoption of Blackwell systems and networking products, with computing revenues reaching $60 billion and networking revenues climbing to $15 billion.
AVGO’s Share Price Performance, Valuation & Estimates
Broadcom shares have increased 18.9% year to date, underperforming the broader Zacks Computer and Technology sector’s rise of 20%.
AVGO Stock Underperforms Sector
Image Source: Zacks Investment Research
The AVGO stock is trading at a premium, with a forward 12-month price/sales of 13.57X compared with the broader sector’s 6.77X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the third quarter of fiscal 2026 earnings is pegged at $3.22 per share, up 2.9% over the past 30 days, suggesting 90.5% growth from the figure reported in the year-ago quarter.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
Broadcom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.