Broadcom Inc. reported fiscal second-quarter 2026 results Wednesday evening that delivered record revenue and another blockbuster AI chip performance, yet still managed to disappoint a portion of investors who had set expectations even higher following a relentless stock rally. Total revenue for the quarter ended May 3 reached $22.2 billion — up 48% year-over-year and above the company's own guidance of $22.0 billion — while adjusted EBITDA rose 52% to a record $15.2 billion, representing a 69% margin. Non-GAAP EPS came in at $2.44, beating the approximately $2.32 consensus by roughly 5%.
The headline figure was AI semiconductor revenue of $10.8 billion — up 143% year-over-year, above the company's own $10.7 billion forecast, and now representing approximately 49% of total revenue. CEO Hock Tan told analysts that AI bookings in the quarter exceeded $30 billion, and the company disclosed long-term multi-gigawatt supply commitments from Google, Anthropic, OpenAI, and Meta. Two additional unnamed customers contributed a combined $6 billion in new AI orders during the quarter. Broadcom designs custom AI accelerator chips — XPUs — alongside AI networking products for hyperscalers, a model that creates sticky, multi-year relationships with high switching costs compared to the commodity GPU approach used by Nvidia.
The forward guidance was the starkest demonstration of the AI cycle's acceleration. Q3 FY2026 revenue is guided to approximately $29.4 billion — up 84% year-over-year and above the $28.5 billion consensus — with AI semiconductor revenue alone guided to grow more than 200% year-over-year to $16.0 billion. Non-GAAP operating margin is expected to remain stable at approximately 67%, reflecting disciplined operating leverage even as the company scales dramatically. Management also reiterated its full-year fiscal 2026 AI semiconductor revenue target of $56 billion — approximately 180% growth — and stated that fiscal 2027 AI semiconductor revenue is expected to exceed $100 billion, supported by multi-year hyperscaler contracts extending visibility into 2028.
Despite all of this, shares fell approximately 3% in after-hours trading Wednesday. The selloff was attributed primarily to a shortfall in Broadcom's infrastructure software segment — the business inherited through the $69 billion VMware acquisition in 2023 — where revenue grew more slowly than the AI segment's trajectory and disappointed some investors who had begun modeling faster cross-sell penetration within the VMware installed base. The divergence between Broadcom's extraordinary AI growth and its software transition timeline is the central stock debate heading into Thursday's session.
The broader market context adds pressure. S&P 500 futures are lower Thursday morning following fresh Iran escalation overnight and a House war powers vote that added political uncertainty to the geopolitical backdrop. The Nasdaq is under particular pressure, with futures down 1.3%, making the after-hours Broadcom selloff likely to extend into the regular session. Broadcom's AI bookings and Q3 guide are unambiguously exceptional by any historical benchmark, but in a market where the S&P 500 rose 16% cumulatively in April and May — a two-month run matched only four times in history — the bar for positive price reactions remains extremely high.
For investors with a $100,000 portfolio, Broadcom represents a core AI infrastructure holding with the most durable multi-year revenue visibility of any company in the sector outside of Nvidia. The after-hours dip, if it extends into Thursday trading, presents a potential entry point for long-term investors with conviction in the AI capital expenditure supercycle. Near-term traders should be aware that the Iran-driven Nasdaq weakness and the software segment miss create meaningful downside risk before the AI guide eventually re-rates the stock higher.