Broadcom Deepens AI and Telecom Push

Broadcom (AVGO) reported strong artificial intelligence revenue growth in its fiscal 2026 first quarter, with total AI revenue rising 106% year over year to $8.4 billion, above its expectations. The company cited continued strength in both networking and custom AI chip businesses as key drivers of this performance.

Within AI, revenue from custom application-specific integrated circuits increased 140%, while AI networking revenue grew 60%. These gains helped lift overall quarterly revenue by 29% year over year to $19.31 billion. Adjusted earnings per share rose 28% to $2.05, topping analyst expectations compiled by LSEG.

Adjusted EBITDA increased 30% to $13.1 billion. Total semiconductor solutions revenue rose 52% to $12.5 billion, while non-AI chip revenue growth remained modest at 4% for the quarter. Infrastructure software revenue edged up 1% to $6.8 billion, supported by a 13% increase in VMware revenue.

Broadcom expects AI momentum to continue into fiscal Q2, guiding for AI revenue to increase 76% to $14.8 billion. The company also forecasts total semiconductor revenue to climb 76% to $14.8 billion and infrastructure software revenue to grow 9% to $7.2 billion.

Management projected overall fiscal Q2 revenue of $22 billion, up 47% year over year. The company expects gross margins to remain flat sequentially. In fiscal Q1, gross margin stood at 77%, slightly lower than 79.1% a year earlier, amid investor focus on the margin profile of its ASIC business.

Broadcom indicated that its five largest custom AI chip customers are progressing well and said these relationships could generate more than $100 billion in AI chip revenue in fiscal 2027. The company views both custom AI ASICs and data center networking components as central to its growth plans.

Alongside its financial performance, Broadcom has started shipping what it describes as the industry’s first 2nm custom compute system-on-chip platform for AI and high performance computing. This platform is intended to support AI workloads and advanced compute requirements.

The company also introduced VMware Telco Cloud Platform 9, which adds new tools for private AI services and telecom network efficiency. These launches extend Broadcom’s push into AI infrastructure and telecommunications software, complementing its existing semiconductor and software portfolio.

Broadcom’s recent announcements are positioned around supplying core building blocks for hyperscalers and carriers rather than consumer-facing services. The 2nm SoC platform and updated VMware Telco Cloud offering may influence how customers consider future AI and communications infrastructure deployments.

Broadcom’s product and revenue developments are occurring against a backdrop of significant capital returns. The company announced a share repurchase authorization of up to $10 billion through the end of 2026, following a prior program under which it repurchased $7.8 billion of stock.

Broadcom also pays a quarterly dividend of $0.65 per share. Recent commentary highlighted first quarter sales of $19.3 billion and net income of $7.3 billion as the financial context for these capital allocation decisions and ongoing investment in AI and telecom offerings.

Shares of Broadcom, traded on the Nasdaq under the ticker AVGO, most recently closed around $330.48 and have returned 71% over the past year, with a substantial gain over five years. Despite the strong performance, the stock is described as being down year to date at the time of the latest results.