Broadcom Says AI Demand Is 'Insatiable'

Broadcom Inc. (NASDAQ:AVGO) stock fell in premarket trading Thursday after the chipmaker reported fiscal second-quarter 2026 results that topped earnings estimates but failed to satisfy Wall Street’s elevated expectations for artificial intelligence growth.

While the company delivered record profitability, accelerating AI revenue and a bullish third-quarter outlook, investors focused on what Broadcom did not do: raise its long-term AI revenue target.

With AI-related stocks priced for increasingly aggressive growth, Broadcom’s decision to maintain its forecast rather than lift it triggered profit-taking across the semiconductor sector.

Earnings Snapshot

Broadcom reported second-quarter revenue of $22.19 billion, up 48% from a year earlier but slightly below analyst estimates of $22.27 billion. Adjusted earnings were $2.44 per share, topping Wall Street expectations of $2.40 per share.

The company said growth was driven by continued strength in artificial intelligence semiconductor demand.

Operating margin reached a record 67.3%, expanding 200 basis points from a year earlier. Adjusted EBITDA totaled $15.2 billion, or 69% of revenue, exceeding company guidance.

Free cash flow reached a record $10.3 billion, representing 46% of revenue. Broadcom ended the quarter with $19.6 billion in cash and cash equivalents.

AI Business Continues To Accelerate

Broadcom underscored the strength of the AI spending boom after CEO Hock Tan described demand for the company’s AI chips and networking products as “insatiable.”

The company booked more than $30 billion in AI semiconductor orders during the quarter, more than 2.7 times the AI revenue shipped during the quarter, signaling robust customer demand and growing visibility into future growth.

Semiconductor revenue rose 79% year over year to a record $15 billion. AI semiconductor revenue surged 143% to $10.8 billion and accounted for roughly 49% of total company revenue.

Infrastructure software revenue increased 9% from a year earlier to $7.2 billion.

Broadcom also highlighted growing partnerships with major AI customers, including Alphabet Inc. (NASDAQ:GOOG) Google, Anthropic, OpenAI, and Meta Platforms, Inc. (NASDAQ:META).

The company said OpenAI has committed to 1.3 gigawatts of compute capacity in 2027 as part of a broader 10-gigawatt agreement through 2029.

Anthropic is expected to access more than 1 gigawatt of TPU-based compute in 2026 and an additional 5 gigawatts beginning in 2027.

Meta is expected to deploy 3 gigawatts of MTIA XPU capacity through 2028, including an initial 1-gigawatt order already secured.

Broadcom Outlook

For the fiscal third quarter, Broadcom expects revenue of approximately $29.4 billion, above analyst estimates of $28.54 billion. The forecast implies 84% year-over-year growth.

The company expects adjusted EBITDA to remain at about 68% of revenue. Infrastructure software revenue is projected to reach $8.9 billion in the third quarter, representing 31% year-over-year growth.

Broadcom said AI semiconductor revenue is expected to double in the second half of fiscal 2026 and exceed $100 billion in 2027. For fiscal 2026, Broadcom expects AI semiconductor revenue to reach $56 billion, up about 180% from fiscal 2025.

Management also expects continued expansion of AI infrastructure through its AI XPU platform, targeting more than 20 gigawatts of compute capacity by 2028 with partners including Apollo Global Management, Inc. (NYSE:APO) and Blackstone Inc. (NYSE:BX).

AVGO Price Action: Broadcom shares were down 15.68% at $404.10 during premarket trading on Thursday, according to Benzinga Pro data.

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