Broadcom Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Broadcom AVGO reported first-quarter fiscal 2026 non-GAAP earnings of $2.05 per share, beating the Zacks Consensus Estimate by 0.99% and jumping 28.1% year over year.

Revenues rallied 29.5% year over year to $19.31 billion and beat the Zacks Consensus Estimate by 0.13%. 

AVGO shares jumped more than 4% at the time of writing this article. The stock has appreciated 83.2% in the trailing 12 months compared with the Zacks Computer & Technology sector’s return of 31.5%.

AVGO’s Q1 Details

Semiconductor solutions revenues (64.8% of net revenues) totaled $12.52 billion, up 52% year over year. The uptick was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues. Non-AI revenues were flat year over year to $4.1 billion. Enterprise networking, broadband and server storage revenues were up year over year, offset by a seasonal decline in wireless. 

Infrastructure software revenues (35.2% of net revenues) climbed 1% year over year to $6.8 billion. VMware revenues grew 13% year over year. Bookings continue to be strong, and total contract value booked in the fiscal first quarter exceeded $9.2 billion.

The non-GAAP gross margin was 77%, down 210 basis points (bps) year over year. 

Research and development expenses, as a percentage of net revenues, decreased 170 bps year over year to 7.9%. SG&A expenses, as a percentage of net revenues, decreased 90 bps to 2.7%.

Adjusted EBITDA rose 30% year over year to $13.13 billion. The adjusted EBITDA margin was 68%, up 40 bps year over year. The non-GAAP operating margin expanded 50 bps year over year to 66.4%.

AVGO’s Balance Sheet & Cash Flow

As of Feb. 1, 2026, cash and cash equivalents were $14.17 billion compared with $16.18 billion as of Nov. 2, 2025.

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 $8.26 billion in cash flow from operations compared with $7.7 billion in the previous quarter. The free cash flow was $8.01 billion compared with $7.47 billion in the prior quarter.

On Dec. 31, 2025, AVGO paid a cash dividend of 65 cents per share, totaling $3.09 billion. During the reported quarter, Broadcom repurchased $7.8 billion or approximately 23 million shares of common stock. The company’s board authorized an additional $10 billion related to share repurchases through the end of calendar 2026.

AVGO Offers Solid Q2 Guidance

For the second quarter of fiscal 2026, Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. AI revenues are expected to surge 140% year over year to $10.7 billion, driven by strong demand for custom AI accelerators. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of total AI revenues. Non-AI revenues are expected to increase 4% year over year to $4.1 billion.

Infrastructure Software revenues are expected to be roughly $7.2 billion, up 9% year over year.  

Gross margin is expected to be flat sequentially at 77%. The adjusted EBITDA margin is expected to be 68% for the second quarter of fiscal 2026.

Zacks Rank & Stocks to Consider

Currently, AVGO has a Zacks Rank #3 (Hold).

Advanced Energy Industries AEIS, IPG Photonics IPGP and Teradyne TER are some better-ranked stocks that investors can consider in the broader sector. 

Advanced Energy Industries, IPG Photonics and Teradyne each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Advanced Energy Industries, IPG Photonics and Teradyne is currently pegged at 19.36%, 22.34% and 27.28%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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