Broadcom sees Q3 revenue growth of 84%

Broadcom delivered a strong second quarter and said revenue growth will accelerate in the third quarter.

The chipmaker and enterprise software vendor reported second quarter earnings of $9.31 billion, or $1.91 a share, on revenue of $22.19 billion, up 48% from a year ago. Non-GAAP earnings were $2.44 a share.

Wall Street was looking for second quarter non-GAAP earnings of $2.40 a share on revenue of $22.07 billion.

For the third quarter, Broadcom projected revenue of $29.4 billion, up 84% from a year ago.

CEO Hock Tan said:

"Q2 semiconductor revenue from AI of $10.8 billion grew 143% year-over-year, above our forecast, driven by increasing demand for custom AI accelerators and AI networking. The momentum continues and in Q3 we expect semiconductor revenue from AI to grow over 200 percent year-over-year to $16 billion."

CFO Kirsten Spears said non-GAAP operating margins remain stable at 67% and will hold that level in the third quarter.

The company, which owns VMware, said its enterprise software revenue is now just 32% of revenue due to the success of AI chips.

On the earnings call, Tan said the following:

• "Demand for XPUs and networking is simply insatiable."
• "For the full year 2026, we expect to achieve AI semiconductor revenue of $56 billion, up approximately 180% from fiscal 2025. Now we expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion. We expect AI semiconductor revenue growth to continue in fiscal 2028."
• "While we have significant IP and execution leadership in XPUs, networking is key to building scalable XPU and GPU clusters. And here in networking, we have at least one generation of technology and product leadership."

Tan then went through Broadcom's core six customers:

• Google: "Our relationship continues to be strategic and very substantial as we continue to deliver vastly superior technology and execution compared to other alternatives. This ability to provide differentiated value to Google ensures that our business will sustain and grow for the foreseeable future."
• Anthropic: "For 2026, we are providing access to Broadcom TPU-based compute of over 1 gigawatt. In April, we entered into an agreement to enable Anthropic to access another 5 gigawatts of next-generation TPU-based compute beginning in 2027."
• OpenAI: "We have delivered silicon, and we are on track for production late 2026. We have a contractual commitment to deploy 1.3 gigawatts in 2027 as part of the larger 10 gigawatts that by 2029 agreement we announced last year."
• Meta: "We expect to deploy 3 gigawatts through the end of 2028. The initial order for 1 gigawatt, which includes XPUs and our networking has been received and will start delivery in the second half of 2027."
• "For our other 2 customers, we expect shipments to begin late 2026 and accelerate into 2027. To date, we have received purchase orders totaling $6 billion."