01—Abstract
Summary
Summary of the 10-Q filed June 9, 2026. Cited figures are marked; the original filing is the authoritative source.
Broadcom Inc. reported strong financial performance for the two fiscal quarters ended May 3, 2026, driven by significant growth in its Semiconductor Solutions segment, fueled by high demand for AI accelerators and networking products.
Total net revenue surged by 39% year-over-year to $41.5 billiona, with Semiconductor Solutions revenue alone jumping 66% to $31.0 billion. This robust top-line growth translated into a substantial increase in profitability, with operating income nearly doubling to $19.4 billion. The Infrastructure Software segment also showed modest growth, contributing $14.0 billion in net revenue.
Despite strong operational performance, the company's balance sheet reflects a substantial increase in cash and cash equivalents, which grew to $19.6 billionb, primarily driven by operating cash flows. However, the company also maintained a significant debt load of approximately $64.9 billion.
Broadcom continued to return capital to shareholders through $6.2 billionc in dividends and $8.45 billion in stock repurchases during the period. A notable development is the backstop agreement with Apollo for AI rack leases, with a maximum exposure of $29 billion, underscoring the company's aggressive positioning in the AI market and its commitment to facilitating customer access to critical AI infrastructure.
02—Key points
Key Highlights
- Total net revenue for the first two fiscal quarters of 2026 increased by 39% to $41.5 billion, compared to $29.9 billion in the prior year period.
- Semiconductor Solutions segment revenue grew by 66% to $31.0 billion, driven by strong demand for AI accelerators and networking products.
- Operating income increased by 60% to $19.4 billion, reflecting improved profitability across both segments.
- Cash and cash equivalents increased to $19.6 billion from $16.2 billion, bolstered by robust operating cash flow.
- The company returned $6.2 billion to shareholders via dividends and repurchased $8.45 billion of common stock during the period.
- Broadcom entered into a significant backstop agreement with Apollo for AI rack leases, representing a potential maximum exposure of $29 billion, aimed at facilitating customer access to AI infrastructure.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Broadcom kept $0.42.
- Revenue$22.19B100.0%
- Cost of revenue−$6.77B30.5%
- Gross profit$15.41B69.5%
- Operating costs−$4.63B20.9%
- Operating income$10.79B48.6%
- Interest, other & tax−$1.48B6.7%
- Net income$9.31B42.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed June 9, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $22.19B$15.00B | +47.9% |
| Cost of Revenue | $6.77B$4.81B | +40.9% |
| Gross Profit | $15.41B$10.20B | +51.2% |
| R&D Expenses | $3.00B$2.69B | +11.2% |
| SG&A Expenses | $1.05B$1.08B | −2.6% |
| Operating Expenses | $4.63B$4.37B | +5.9% |
| Operating Income | $10.79B$5.83B | +85.1% |
| Interest Expense | $776.00M$769.00M | +0.9% |
| Net Income | $9.31B$4.96B | +87.5% |
| EPS (Basic) | $1.96$1.05 | +86.7% |
| EPS (Diluted) | $1.91$1.03 | +85.4% |
| Shares Outstanding (Basic) | 4.75B4.71B | +0.8% |
| Shares Outstanding (Diluted) | 4.88B4.83B | +1.0% |
05—Questions
Frequently Asked Questions
What drove the significant revenue growth for Broadcom in the first half of fiscal year 2026?
The primary driver for Broadcom's substantial revenue growth was the strong performance of its Semiconductor Solutions segment. This was fueled by exceptionally high demand for its custom AI accelerators and AI networking products, indicating a strong market position in the rapidly expanding AI infrastructure space. The Infrastructure Software segment also contributed to the growth, though at a more modest pace.
How is Broadcom managing its substantial debt load while returning capital to shareholders?
Broadcom has a substantial debt of approximately $64.9 billion. Despite this, the company generated strong operating cash flow of $18.8 billion in the first two quarters of fiscal year 2026, which allowed it to continue paying significant dividends ($6.2 billion) and execute substantial stock repurchases ($8.45 billion). The company also refinanced some debt and managed its borrowings effectively, indicating a strategic approach to capital management that balances growth investment, debt servicing, and shareholder returns.
What is the significance of the Apollo backstop agreement for AI racks?
The backstop agreement with Apollo for AI racks, with a potential maximum exposure of $29 billion, is a strategic move to facilitate customer access to critical AI computing infrastructure. By partnering with Apollo, Broadcom is ensuring customers can secure AI compute capacity, even if they face financing challenges. This arrangement highlights Broadcom's commitment to capturing the AI market opportunity and mitigates a potential barrier to customer adoption, though it introduces a significant contingent liability for Broadcom in case of customer default.
How does Broadcom's gross margin performance look, and what is influencing it?
Broadcom maintained a strong gross margin of 69% for the first two quarters of fiscal year 2026, a slight improvement from 68% in the prior year. While overall gross margin was robust, the increasing revenue mix from the Semiconductor Solutions segment, which typically has a lower gross margin than Infrastructure Software, acted as a partial offset. However, strong product demand, particularly for AI-related solutions, and effective cost management likely contributed to the stable and high gross margin performance.
06—Continue