Broadcom outlines $29.4B Q3 revenue outlook driven by $16B AI semiconductor revenue
View original at seekingalpha.comBroadcom outlines $29.4B Q3 revenue outlook driven by $16B AI semiconductor revenue Earnings Call Insights: Broadcom (AVGO) Q2 fiscal 2026 MANAGEMENT VIEW * "In our fiscal Q2 2026, total revenue reached a record $22.2 billion, up 48% year-on-year, above our guidance on strength in AI semiconductors." (President, CEO &…
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Q3 FY2026 software revenue is forecast at approximately $8.9 billion, up 31% year-on-year.
60% confidenceQ3 FY2026 semiconductor revenue is forecast at approximately $20.5 billion, with AI semiconductor revenue of $16 billion, up over 200% year-on-year.
60% confidenceBroadcom is creating the AI XPV platform with Apollo, Blackstone, and other leading investors to deploy more than 20 gigawatts of compute capacity through 2028.
60% confidenceQ2 FY2026 AI semiconductor bookings exceeded $30 billion against $10.8 billion shipped, reflecting customers ordering well in advance of deployment.
60% confidenceBroadcom reiterates FY2027 AI semiconductor revenue guidance of in excess of $100 billion.
60% confidenceFree cash flow in Q2 FY2026 was a record $10.3 billion, representing 46% of revenue.
60% confidenceGoogle's long-term AI chip commitment with Broadcom is very substantial in dollars, but Broadcom fully expects some diversity of sources for Google.
60% confidenceQ3 FY2026 operating margin is expected to be approximately 67%, flat quarter-on-quarter, offsetting gross margin pressure through operating leverage.
60% confidenceCustomers are ordering AI semiconductors well in advance because deploying compute requires long lead times, giving Broadcom demand visibility through 2028.
60% confidenceQ2 FY2026 gross margin was 77.1% of revenue, down 230 basis points year-on-year as semiconductor became a larger proportion of product mix.
60% confidenceAI networking represents approximately 30% of AI semiconductor revenue (the 40% figure cited was the high end), and CPO/optics are not yet meaningful.
60% confidenceQ2 FY2026 operating income was a record $14.9 billion; operating margin increased 200 basis points year-over-year to 67.3% as operating expenses remained flat.
60% confidenceBroadcom ended Q2 FY2026 with $19.6 billion in cash, $4.3 billion in inventory, and 86 days of inventory on hand versus 68 days in Q1.
60% confidenceThe first tranche of the AI XPV platform, valued at $35 billion, is currently being launched by Apollo.
60% confidenceBroadcom is not in the rack business — it is purely in the chip business.
60% confidenceQ1 FY2026 total revenue was $19.3 billion and Q1 AI semiconductor revenue was $8.4 billion.
60% confidenceThe Q3 gross margin decline does not represent a structural change in semiconductor margin but reflects product mix between semiconductors and infrastructure software.
60% confidenceAs TPUs continue to accelerate, there will be overall pressure on margins, but the AI networking connectivity side of the business has very rich margins.
60% confidenceBroadcom has secured sufficient wafer and HBM supply and can accommodate customer upside requests.
60% confidenceQ3 FY2026 consolidated revenue guidance is $29.4 billion, above analyst estimate of approximately $28.5 billion.
60% confidenceQ2 FY2026 total revenue reached a record $22.2 billion, up 48% year-on-year, above guidance on strength in AI semiconductors.
60% confidenceSemiconductor Solutions segment revenue was a record $15 billion in Q2 FY2026, with AI semiconductor revenue representing 49% of Broadcom's total revenue.
60% confidenceBroadcom expects full-year FY2026 AI semiconductor revenue of $56 billion, up approximately 180% from fiscal 2025.
60% confidenceFirst-half FY2026 AI semiconductor revenue was approximately $19 billion; doubling that in the second half yields approximately $56 billion for the full fiscal year.
60% confidenceDemand for XPUs and networking is simply insatiable.
60% confidenceQ3 FY2026 consolidated gross margin is expected to decline to approximately 74% as AI semiconductor proportion of revenue grows.
60% confidence