Broadcom Inc. reported second-quarter fiscal 2026 revenue of $22.19 billion, up 48 percent year over year, as demand for AI semiconductor products continues to drive growth. The company guides third-quarter revenue at $29.4 billion, up 84 percent year over year, with AI semiconductor revenue projected at $16 billion.
The setup
Broadcom operates through two segments: semiconductor devices and infrastructure software. The company’s custom AI accelerators now account for the bulk of its semiconductor business. In the second quarter, AI semiconductor revenue surged 143 percent year over year and represented 68 percent of total semiconductor revenue. Record operating margin reached 67.3 percent, and free cash flow hit $10.3 billion in the quarter.
The company also announced that CFO Kirsten Spears is retiring, with Amie Thuener set to take over. Management guided Q3 AI semiconductor revenue to approximately $16 billion, projecting over 200 percent year-over-year growth driven by AI infrastructure demand. AI bookings during the quarter exceeded $30 billion against $10.8 billion shipped.
Key numbers
| Metric | Value |
|---|---|
| Q2 FY26 revenue | $22.19 billion |
| Revenue growth YoY | 48% |
| AI semiconductor revenue growth | 143% YoY |
| Operating margin | 67.3% |
| Free cash flow (Q2) | $10.3 billion |
| Q3 revenue guidance | $29.4 billion |
| Q3 AI revenue guidance | $16.0 billion |
| Quarterly dividend | $0.65 |
| Annual dividend | $2.60 |
| Yield | ~0.67% |
Peer comparison
| Company | Ticker | Dividend Yield | 5-Year Div Growth |
|---|---|---|---|
| Broadcom | AVGO | ~0.67% | ~13% |
| NVIDIA | NVDA | ~0.03% | N/A |
| Qualcomm | QCOM | ~2.1% | ~5% |
| AMD | AMD | 0% | N/A |
Analyst outlook for Broadcom
Analysts at multiple Wall Street firms maintain favorable ratings on AVGO. The consensus 12-month price target sits at approximately $527.88, with a high estimate of $675 and a low estimate of $215.88. Forty-four analysts recommend buying the stock, while zero suggest selling. The technical daily buy and sell signal is rated Strong Buy based on moving averages and other indicators.
Broadcom’s AI franchise shows strong visibility. Management has guided fiscal 2026 AI revenue to approximately $56 billion and fiscal 2027 AI revenue in excess of $100 billion. The company reported eight consecutive quarters of earnings per share beats. Billionaire Stanley Druckenmiller reduced his Broadcom position in the most recent quarter, though other institutional investors maintain substantial stakes.
Capital return strategy
Broadcom has raised its dividend every year since fiscal 2011, most recently from $0.60 to $0.65 per share quarterly. While the current yield of approximately 0.67 percent is modest, the dividend has grown at roughly 12 to 13 percent annually over the past three to five years. For investors focused on rising income over time rather than immediate yield, Broadcom’s dividend growth record stands out among large-cap semiconductor names.
The company returned a significant portion of its free cash flow to shareholders through dividends and buybacks. With operating margins above 67 percent and AI bookings exceeding $30 billion, Broadcom’s ability to fund continued dividend increases appears well supported.
Risks to watch
Broadcom carries approximately $91.5 billion in total liabilities related to its VMware acquisition. The stock’s beta of 1.473 indicates above-average volatility relative to the broader market. Gross margin declined 230 basis points to 77.1 percent in the second quarter due to product mix shift toward lower-margin AI chips.
Management also noted geopolitical overhang, excluding China Data Center compute revenue from guidance. The company shipped zero H20 units in the most recent quarter. Any further restrictions on chip exports to China could pressure revenue growth.
Common mistakes tech investors make
Chasing high-growth semiconductor stocks without regard for valuation can lead to significant drawdowns. Broadcom trades at a price-to-earnings ratio near 69, which is elevated compared to historical norms. Investors should also avoid overconcentrating in a single AI-related stock. A diversified allocation across semiconductor equipment, chip designers, and infrastructure software reduces company-specific risk.
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