Broadcom Q2 Earnings Surpasses Estimates, Revenues Surge Y/Y

Broadcom AVGO reported second-quarter fiscal 2026 non-GAAP earnings of $2.44 per share, which beat the Zacks Consensus Estimate by 1.67% and rose 54% year over year. Revenues rose 48% year over year to $22.19 billion and beat the Zacks Consensus Estimate by 0.68%. The quarter benefited from accelerating AI semiconductor revenues, which reached $10.8 billion, up 143% year over year and exceeding the company’s outlook.AVGO shares were down 0.49% at the time of writing this article. The stock has appreciated 84.4% in the trailing-12 months compared with the Zacks Computer & Technology sector’s return of 55.2%.AVGO’s Q2 DetailsSemiconductor solutions revenues (68% of net revenues) totaled $15.01 billion, up 79% year over year. Management said the upside was powered by AI semiconductors, with networking representing almost 40% of AI revenues in the quarter.                  Broadcom Inc. Price, Consensus and EPS Surprise Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. QuoteInfrastructure software revenues (32% of net revenues) climbed 9% year over year to $7.18 billion. Management noted that software bookings stayed strong and the company sustained ARR growth of 17% year over year.Profitability remained a standout despite mix headwinds. Non-GAAP gross margin was 77.1%, down 230 basis points year over year as semiconductors became a larger proportion of the mix. Research and development expenses, as a percentage of net revenues, decreased 290 bps year over year to 7.2%. SG&A expenses, as a percentage of net revenues, decreased 130 bps to 2.6%.Adjusted EBITDA rose 52% year over year to $15.24 billion. The adjusted EBITDA margin was 68.7%, up 210 bps year over year. Operating margin rose 52.4% year over year to a record $14.9 billion, reflecting strong operating leverage as non-GAAP operating margin expanded 200 bps year over year to 67.3%.AVGO’s Balance Sheet & Cash FlowAs of May 3, 2026, cash and cash equivalents were $19.63 billion, up from $14.17 billion as of Feb.1, 2026.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 $10.49 billion in cash flow from operations in the quarter compared with $8.26 billion in the previous quarter. The free cash flow was $10.26 billion compared with $8.01 billion in the prior quarter.During the quarter, Broadcom paid stockholders $3.09 billion of cash dividends based on a quarterly common stock dividend of $0.65 per share. The company also repurchased $600 million of common stock under its repurchase program.AVGO Offers Q3 GuidanceFor the third quarter of fiscal 2026, Broadcom expects revenues of approximately $29.4 billion, indicating 84% year-over-year growth. The company expects non-GAAP operating income and adjusted EBITDA to be approximately 67% and 68% of projected revenues, respectively. Management also guided for semiconductor revenues of roughly $20.5 billion and infrastructure software revenues of about $8.9 billion for the third quarter of fiscal 2026. Within semiconductors, management expects AI semiconductor revenues to accelerate to $16 billion in the third quarter of fiscal 2026, soaring more than 200% year over year, as demand for custom AI accelerators and AI networking remains strong.Zacks Rank & Stocks to ConsiderCurrently, AVGO carries a Zacks Rank #3 (Hold).Advanced Energy Industries AEIS, Analog Devices ADI and Box BOX are some better-ranked stocks that investors can consider in the broader sector. Advanced Energy Industries, Analog Devices and Box each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Long-term earnings growth rate for Advanced Energy Industries, Analog Devices and Box are currently pegged at 30.11%, 28.76% and 58.14%, respectively.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks