Record AI Revenue & Should You Buy?
Broadcom AVGO earnings landed on June 3, 2026, and the headline number was a record. AI semiconductor revenue reached $10.8 billion for the quarter ended May 3.
Total revenue came in at $22.2 billion, up 48% year over year. Non-GAAP earnings per share hit $2.44, ahead of the roughly $2.32 the Street expected.
Yet the stock dipped about 3% after hours. The reason was not the AI engine. It was a small shortfall in the software segment, and the gap between the two is the story you need to understand.
Q2 Results: AI Semiconductor Revenue Hit $10.8B, Up 143%
The AI business is now the core of Broadcom. AI semiconductor revenue of $10.8 billion grew 143% year over year.
That figure was roughly 49% of total revenue. In other words, almost half of every dollar Broadcom earned this quarter came from AI chips.
AI bookings exceeded $30 billion. That backlog signals demand stretching well beyond a single quarter.
Bookings of that size matter for visibility. They tell you the revenue ramp is contracted, not hoped for.
The non-AI side held up too. Total revenue of $22.2 billion and an EPS beat gave the quarter a clean top-line and bottom-line win.
For investors weighing the report, the takeaway is balance. The growth engine is firing while the legacy business stays steady.
Why the Stock Slipped After Hours Despite Raised Guidance
The dip confused some investors. Guidance went up, not down. So why did shares fall?
The answer sits in infrastructure software. That segment posted $7.2 billion, up 9% year over year, roughly 32% of revenue.
Annual recurring revenue rose 17% year over year, a healthy number on its own. The problem was the comparison.
According to TechTimes: the software figure came in slightly light versus a higher Street whisper near $7.32 billion, which triggered the roughly 3% after-hours dip.
This is a segment shortfall, not a guidance miss. The market reacted to one soft line item inside an otherwise strong quarter.
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Broadcom does not sell off-the-shelf GPUs the way Nvidia does. It designs custom AI accelerators, or XPUs, plus networking for specific hyperscaler clients.
That model creates sticky multi-year relationships. A custom chip is co-engineered with the customer, so switching costs are high.
This contrasts with the commercial-GPU approach at Nvidia and the broader chip lineup at AMD. The custom-silicon thesis is the same one that drove the recent run in Marvell’s custom-silicon story.
The forward guide is where the pipeline shows up. According to The Motley Fool: Q3 total revenue is guided to about $29.4 billion, up 84% year over year and above the roughly $28.5 billion consensus.
The Q3 AI guidance
AI semiconductor revenue is guided to grow more than 200% to about $16.0 billion in Q3. That is a sharp acceleration from this quarter’s $10.8 billion.
Such a guide implies the custom XPU ramps are landing on schedule. Demand is not just present, it is compounding.
The longer-term targets
Management reaffirmed full-year FY2026 AI revenue of about $56 billion, roughly 180% growth. They also reiterated FY2027 AI revenue above $100 billion.
A $100 billion AI target is the anchor for the bull case. It frames this quarter as one step in a multi-year climb.
Is AVGO Still a Buy at These Levels?
The after-hours dip is the kind of move that rewards a closer look. A 3% drop on a soft software line, against record AI growth, can read as noise rather than signal.
The bull case is straightforward. AI revenue is accelerating, guidance was raised, and the custom-silicon model locks in hyperscaler demand for years.
The bear case is valuation and concentration. AI is now half of revenue, so any slowdown in hyperscaler spending would hit the stock hard.
The software softness is worth watching, but not overweighting. One quarter of a slightly light segment does not break the long-term thesis.
Custom silicon is the differentiator to track from here. If the XPU ramps stay on schedule, the AI line should keep compounding.
No one can promise where the price goes next. The question is whether you believe the multi-year AI ramp justifies the current level.
Conclusion
Broadcom delivered a record quarter. AI revenue of $10.8 billion, up 143%, and an EPS beat made the headline strong.
The after-hours dip came from a small software shortfall, not from the AI engine or the guidance. Management actually raised the outlook and pointed to AI growth above 200% in Q3.
For long-term investors, the signal is the pipeline. A reaffirmed $56 billion FY2026 AI target and a $100 billion FY2027 ambition matter more than one soft line item.
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FAQ
Why did Broadcom stock fall after strong earnings?
Shares slipped about 3% because infrastructure software revenue came in slightly below the Street’s higher whisper, not because of any guidance cut.
How much AI revenue did Broadcom report in Q2 FY2026?
Broadcom reported $10.8 billion in AI semiconductor revenue, up 143% year over year and roughly 49% of total revenue.
What is Broadcom’s Q3 AI guidance?
Management guided AI semiconductor revenue to grow more than 200% to about $16.0 billion in Q3.
How is Broadcom different from Nvidia?
Broadcom designs custom AI accelerators for specific hyperscalers, while Nvidia sells commercial off-the-shelf GPUs.
