Broadcom Inc. (AVGO) Earnings & Analysis

Latest quarter

Broadcom reported Q3 FY2026 revenue of $29.6 billion, compared with the consensus of $29.5 billion, while adjusted EPS of $3.32 exceeded the consensus of $3.22. The company reported that revenue increased 85.5% from $16.0 billion in Q3 FY2025, and diluted EPS rose 215.3% to $2.68.

Broadcom’s filing attributed higher Semiconductor Solutions revenue to demand for networking solutions, primarily custom AI accelerators and AI networking products. The filing attributed Infrastructure Software growth to demand for VMware Cloud Foundation, including license revenue on contracts without customer termination rights. Semiconductor Solutions generated $20.8 billion of Q3 revenue, while Infrastructure Software generated $8.8 billion.

The company reported gross margin of 69.1%, up 2.0 percentage points from a year earlier, and operating margin of 53.9%, up 17.0 percentage points. Broadcom reported operating cash flow of $14.2 billion and free cash flow of $13.7 billion. The company reported Q3 revenue within its prior guidance of approximately $29.4 billion.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

Revenue came in within or above the company’s guide in 6 of the last 6 quarters it guided.

What management said on the call

No transcript or other record of Broadcom’s latest earnings call was available. The available filing said Semiconductor Solutions revenue increased from demand for networking solutions, primarily custom AI accelerators and AI networking products.

The filing said Infrastructure Software revenue increased primarily from demand for VMware Cloud Foundation and additional license revenue recognized on contracts where customers do not have the right to terminate. Broadcom stated that the majority of new software contracts no longer had termination-for-convenience provisions as of the quarter ended August 2, 2026.

Broadcom’s filing said gross margin increased primarily because of demand for AI-related semiconductor solutions, while a higher mix of Semiconductor Solutions revenue partly offset that benefit because the segment has a lower gross margin than Infrastructure Software. The company also reported that aggregate sales to its top five end customers accounted for approximately 55% of quarterly net revenue and that it expects significant customer concentration to continue.

The filing said inventory increased to support higher expected shipments for AI-related semiconductor solutions. Broadcom also stated that it is subject to risks from macroeconomic conditions, financial-market volatility, geopolitical events, supply constraints, trade tensions and tariffs, which may cause net revenue to fluctuate.

Guidance

Broadcom expects Q4 FY2026 revenue of approximately $34.8 billion, compared with its prior Q3 FY2026 revenue guidance of approximately $29.4 billion. The company expects Q4 AI semiconductor revenue of $21.7 billion. Broadcom also expects Q4 non-GAAP operating income of approximately 66.0% of projected revenue, compared with its prior Q3 FY2026 guide of approximately 67.0%.