Chip giant posts record profitability and bullish AI outlook despite a slight revenue miss
Broadcom(AVGO) reported mixed fiscal second-quarter 2026 results, sending shares lower despite record profitability and explosive growth in its artificial intelligence business. The semiconductor and infrastructure software company posted adjusted earnings of $2.44 per share, surpassing Wall Street expectations of $2.40 and representing a 54% increase from the prior year. However, revenue of $22.19 billion narrowly missed analyst estimates of $22.27 billion.
The standout performer was Broadcom’s AI semiconductor segment. Revenue from AI-related products reached $10.8 billion during the quarter, helping drive total semiconductor solutions revenue to $15.0 billion, up sharply from $8.4 billion a year earlier. Management highlighted accelerating demand for custom AI accelerators and networking solutions that support large-scale AI deployments.
Looking ahead, Broadcom offered an optimistic outlook. The company expects third-quarter revenue of approximately $29.4 billion, above analyst estimates of $28.54 billion. Even more notably, management forecasts AI semiconductor revenue to exceed $16 billion in the third quarter, representing growth of more than 200% year over year.
The company also achieved record revenue, operating profit, and free cash flow during the quarter, demonstrating strong execution and operating leverage. While investors initially focused on the slight revenue miss, Broadcom’s long-term growth narrative remains firmly tied to the AI infrastructure boom.
As enterprises and hyperscale cloud providers continue investing heavily in artificial intelligence, Broadcom appears well-positioned to remain one of the industry’s primary beneficiaries. The company’s accelerating AI business and strong guidance suggest that demand for advanced semiconductor solutions remains robust despite broader market volatility.
