Broadcom’s latest 10-Q shows a sharp jump in revenue and operating profit, driven by AI-related semiconductor demand and stronger VMware Cloud Foundation sales.
For the fiscal quarter ended May 3, 2026, net revenue rose to $22.187 billion from $15.004 billion a year earlier, up 48%. For the first two fiscal quarters, revenue climbed to $41.498 billion from $29.920 billion, up 39%.
The semiconductor solutions segment was the main engine. Quarterly segment revenue surged 79% to $15.009 billion from $8.408 billion, while two-quarter revenue increased 66% to $27.524 billion from $16.620 billion. Broadcom said the gain came from “strong demand for our networking solutions,” led by custom AI accelerators and AI networking products.
Infrastructure software also grew, though more modestly. Quarterly revenue rose 9% to $7.178 billion from $6.596 billion, and two-quarter revenue increased 5% to $13.974 billion from $13.300 billion. Broadcom attributed the increase primarily to demand for VMware Cloud Foundation.
Gross margin widened in dollar terms alongside the revenue surge. Quarterly gross margin reached $15.415 billion, up from $10.197 billion, and two-quarter gross margin rose to $28.572 billion from $20.342 billion. As a percentage of revenue, gross margin held at 69% in both current periods, versus 68% a year earlier.
Operating income nearly doubled in the quarter, rising to $10.788 billion from $5.829 billion. For the two-quarter period, operating income advanced to $19.351 billion from $12.089 billion.
Broadcom’s cost structure also moved higher. Cost of revenue increased to $6.772 billion in the quarter from $4.807 billion, and to $12.926 billion from $9.578 billion in the two-quarter period. Research and development expense rose to $2.995 billion in the quarter from $2.693 billion, and to $5.960 billion from $4.946 billion over two quarters. The company said the increase was primarily due to higher stock-based compensation.
Selling, general and administrative expense was $1.055 billion in the quarter, down from $1.083 billion, and $2.074 billion for two quarters, up from $2.032 billion. Broadcom said higher stock-based compensation was largely offset by lower acquisition-related costs.
Stock-based compensation was a major expense item. It totaled $2.092 billion in the quarter, up from $1.771 billion, and $4.268 billion for two quarters, up from $3.051 billion. Broadcom said the increase reflected the full-year impact of two-year time* and market-based restricted stock unit awards granted in the second quarter of fiscal 2025.
Cash generation remained strong. Broadcom said it generated $10.493 billion of cash from operations during the quarter. It paid $3.092 billion in cash dividends and repurchased $600 million of common stock.
Customer concentration remained extreme. Direct sales to one semiconductor solutions customer, described as a distributor, accounted for 42% of net revenue in both the quarter and the two-quarter period, up from 29% in the comparable prior-year periods. Broadcom said its top five end customers accounted for about 45% of net revenue, compared with 40% a year earlier.
Broadcom also disclosed upfront license revenue of $1.964 billion in the quarter and $3.719 billion in the two-quarter period, booked within products revenue. For the prior-year periods, it reclassified $1.803 billion and $3.775 billion, respectively, from subscriptions and services revenue to products revenue to conform with current presentation.
At quarter-end, Broadcom said unrecognized compensation cost related to unvested stock awards totaled $20.106 billion, net of expected forfeitures, with a remaining weighted-average service period of 3.0 years. Today the company's shares have moved -0.85% to a price of $393.235. For the full picture, make sure to review Broadcom's 10-Q report.
