Broadcom Inc. (AVGO): Results of Operations and Financial Condition
Broadcom Inc. (AVGO) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Broadcom Inc. Announces Third Quarter Fiscal Year 2026 Financial Results and Quarterly Dividend • Revenue of $29.6 billion for the third quarter, up 86 percent from the prior year period • GAAP operating income of $16.0 billion for the third quarter; Non-GAAP operati
How this was made
The 30-second read
Why it matters
The earnings beat and forward guidance suggest a significant upside catalyst for the stock and its peers in the semiconductor sector.
Market read
Broadcom's strong performance and aggressive guidance are likely to lift the broader AI chip and networking hardware market.
What to watch
Potential supply constraints or macro slowdown could limit the upside despite strong guidance.
Revenue of $29.6 billion for the third quarter, up 86 percent from the prior year period; GAAP diluted EPS of $2.68 and non-GAAP diluted EPS of $3.32; fourth quarter fiscal year 2026 revenue guidance of approximately $34.8 billion.
Third-quarter revenue increased 86% year-over-year, semiconductor solutions revenue increased 127%, GAAP operating income increased 171%, and free cash flow increased 95%. Management guided to approximately $34.8 billion of fourth-quarter revenue, up 93% from the prior-year period, with approximately 66 percent non-GAAP operating income as a percentage of projected revenue.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenueGAAP | $29,591 million | – | +86% |
| Gross marginGAAP | $20,456 million | – | – |
| Research and developmentGAAP | $2,895 million | – | – |
| Selling, general and administrative expenseGAAP | $996 million | – | – |
| Total operating expensesGAAP | $4,501 million | – | – |
| Operating incomeGAAP | $15,955 million | – | +171% |
| Operating incomenon-GAAP | $20,095 million | – | +92% |
| Net incomeGAAP | $13,088 million | – | +216% |
| Net incomenon-GAAP | $16,372 million | – | +95% |
| Earnings per common share - basicGAAP | $2.75 | – | – |
| Earnings per common share - dilutedGAAP | $2.68 | – | +215% |
| Earnings per common share - dilutednon-GAAP | $3.32 | – | +96% |
| Gross marginnon-GAAP | $22,191 million | – | – |
| Research and developmentnon-GAAP | $1,551 million | – | – |
| Selling, general and administrative expensenon-GAAP | $545 million | – | – |
| Total operating expensesnon-GAAP | $2,096 million | – | – |
| Net cash provided by operating activitiesother | $14,197 million | – | +98% |
| Purchases of property, plant and equipmentother | $(532) million | – | – |
| Free cash flownon-GAAP | $13,665 million | – | +95% |
| Interest expenseGAAP | $(778) million | – | – |
| Provision for income taxesGAAP | $2,187 million | – | – |
| Stock-based compensation expenseother | $2,019 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Semiconductor solutionsDemand for custom AI accelerators and networking continued to be very strong; Q3 AI semiconductor revenue was $16.7 billion. | $20,839 million | – | +127% |
| Infrastructure softwareNo specific segment driver was quantified in the release. | $8,752 million | – | +29% |
Fourth quarter fiscal year 2026, ending November 1, 2026 outlook
- Revenueapproximately $34.8 billion
- NoteNon-GAAP operating income guidance of approximately 66 percent of projected revenue.
- NoteAI semiconductor revenue is expected to accelerate to $21.7 billion, up 236% year-over-year.
Capital returns
- On June 30, 2026, the Company paid a cash dividend of $0.65 per share, totaling $3.1 billion.
- The Board of Directors approved a quarterly cash dividend of $0.65 per share, payable on September 30, 2026 to stockholders of record at the close of business on September 21, 2026.
- Repurchases of common stock under the repurchase program were $8,450 million for the three fiscal quarters ended August 2, 2026.
- No repurchases of common stock under the repurchase program were reported for the fiscal quarter ended August 2, 2026.
What drove it
- Q3 AI semiconductor revenue of $16.7 billion grew 221% year-over-year and 54% quarter-over-quarter.
- Semiconductor solutions revenue was $20,839 million, or 70% of total net revenue, and increased 127% year-over-year.
- Infrastructure software revenue was $8,752 million, or 30% of total net revenue, and increased 29% year-over-year.
- Management cited continued strong demand for custom AI accelerators and networking.
Concerns
- The Company identified cyclicality in the semiconductor industry undergoing profound change due to AI as a risk.
- The Company identified dependence on significant customers and potential fluctuations in the timing and volume of significant customer demand as risks.
- The Company identified significant indebtedness and the need to generate sufficient cash flows to service and repay debt as risks.
- Actual results may vary from the guidance and the variations may be material.
What to watch
- Whether fourth-quarter revenue reaches approximately $34.8 billion.
- Whether AI semiconductor revenue reaches the expected $21.7 billion.
- Whether fourth-quarter non-GAAP operating income is approximately 66 percent of projected revenue.
- The pace of semiconductor solutions growth relative to infrastructure software growth.
- Cash generation, debt payments, and the amount and frequency of the share repurchase program.
Balance sheet and cash flow
- Cash and cash equivalents were $23,975 million at August 2, 2026, compared with $19,628 million at the beginning of the fiscal quarter and $16,178 million at November 2, 2025.
- Short-term debt was $2,252 million and long-term debt was $57,167 million at August 2, 2026.
- Trade accounts receivable, net, were $13,707 million and inventory was $4,523 million at August 2, 2026.
- Net cash provided by operating activities was $14,197 million; purchases of property, plant and equipment were $(532) million; and free cash flow was $13,665 million.
- Payments on debt obligations were $(5,628) million during the fiscal quarter ended August 2, 2026.
- Net change in cash and cash equivalents was $4,347 million during the fiscal quarter ended August 2, 2026.
Analysis
Broadcom reported third-quarter fiscal year 2026 net revenue of $29,591 million, up 86% from $15,952 million in the prior-year quarter and above the prior-quarter figure of $22,187 million. Semiconductor solutions produced $20,839 million of revenue, representing 70% of total net revenue and growth of 127% year-over-year. Infrastructure software contributed $8,752 million, or 30% of total net revenue, and grew 29% year-over-year. Management attributed the semiconductor performance to very strong demand for custom AI accelerators and networking, with AI semiconductor revenue of $16.7 billion.
Profit growth outpaced revenue growth on both reported bases. GAAP operating income was $15,955 million, up 171% year-over-year, while non-GAAP operating income was $20,095 million, up 92%. GAAP net income was $13,088 million and GAAP diluted earnings per share were $2.68. Non-GAAP net income was $16,372 million and non-GAAP diluted earnings per share were $3.32. GAAP gross margin was $20,456 million, while non-GAAP gross margin was $22,191 million. Total GAAP operating expenses were $4,501 million, below $4,816 million in the prior-year quarter and $4,627 million in the prior quarter.
Cash generation was substantial. Net cash provided by operating activities was $14,197 million, up 98% year-over-year, and free cash flow was $13,665 million, up 95% year-over-year. The release states that free cash flow represented 46 percent of revenue. The Company spent $(532) million on purchases of property, plant and equipment and paid $(5,628) million on debt obligations during the quarter. Cash and cash equivalents ended the quarter at $23,975 million, while short-term debt and long-term debt were $2,252 million and $57,167 million, respectively.
Capital returns included a $0.65 per-share cash dividend paid on June 30, 2026, totaling $3.1 billion, and a newly approved $0.65 per-share quarterly dividend payable on September 30, 2026. Repurchases of common stock under the repurchase program were $8,450 million for the three fiscal quarters ended August 2, 2026, although none were reported for the third fiscal quarter. The combination of dividends, repurchases over the year-to-date period, and debt payments is a key use of the Company’s operating cash flow.
For the fourth quarter ending November 1, 2026, Broadcom guided for approximately $34.8 billion of revenue, an increase of 93 percent from the prior-year period, and non-GAAP operating income of approximately 66 percent of projected revenue. Management expects AI semiconductor revenue of $21.7 billion, up 236% year-over-year, and said it expects to maintain the non-GAAP operating margin at 66%, flat from a year ago. The principal reported items to monitor are conversion of AI accelerator and networking demand into the guided revenue level, the maintained non-GAAP operating-income rate, and cash flow relative to debt service and capital returns.
Management, verbatim
Demand for our custom AI accelerators and networking continues to be very strong. Q3 AI semiconductor revenue of $16.7 billion grew 221% year-over-year, and 54% quarter-over-quarter.
Hock Tan, President and CEO of Broadcom Inc.
In Q4 the momentum continues, and we expect AI semiconductor revenue to accelerate to $21.7 billion, up 236% year-over-year.
Hock Tan, President and CEO of Broadcom Inc.
Broadcom achieved record revenue, operating profit and free cash flow in Q3. We delivered non-GAAP operating income growth of 92% year-over-year, as consolidated revenue grew 86% year-over-year to $29.6 billion.
Amie Thuener, CFO of Broadcom Inc.
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, comparison of actual third-quarter results with prior guidance is unavailable.
- GAAP gross-margin guidance was not provided.
- GAAP operating-income guidance was not provided.
- Guidance for operating expenses was not provided.
- Guidance for tax rate was not provided.
- A reported GAAP or non-GAAP gross-margin percentage for the third quarter was not provided.
- A reported GAAP or non-GAAP operating-margin percentage for the third quarter was not provided.
- Prior-quarter non-GAAP diluted earnings per share was not provided on its own line.
- Prior-quarter cash and debt balances were not provided, except cash and cash equivalents of $19,628 million at the end of the prior fiscal quarter.
- Third-quarter share repurchases under the repurchase program were not reported as an amount other than no repurchases shown in the cash flow statement.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Broadcom's Q3 FY2026 results were filed via an SEC 8‑K, marking the first public disclosure of the numbers and outlook.
Ticker impact
Broadcom reported Q3 FY2026 revenue of $29.6B (+86%) and issued Q4 revenue guidance of $34.8B (+93%).
Expect price to rise on the day of release and maintain bullish momentum into the next quarter.
Revenue and EPS far exceeded prior year, and guidance signals continued high growth in AI semiconductor segment.
Market effects
Highlights strength of AI semiconductor and networking hardware, supporting sector rally.
Positive for US tech equities and related supply-chain stocks.
Reinforces global demand for AI chips, may boost related overseas manufacturers.
Counterpoint
If AI demand softens, the high guidance could become unsustainable, leading to a pullback.
Key entities
- CompanyBroadcom Inc.
Global technology leader in semiconductor and infrastructure software.
- ExecutiveHock Tan
President and CEO of Broadcom, quoted on AI semiconductor demand.
