管理層發言
Welcome to Broadcom Inc. Second quarter fiscal year 2026 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Ji Yoo, Head of Investor Relations of Broadcom, Inc.
Thank you, operator, and good afternoon, everyone. Joining me on today's call are Hock E. Tan, President and CEO; Charlie Kawwas, President, Semiconductor Solutions Group; and Ram Velaga, President, Infrastructure Software Group. Also joining is Kirsten Spears, Chief Financial Officer. As we announced, Kirsten will be retiring June 12. And today, we have joining us our incoming Chief Financial Officer, Amy Teiner. Thank you, Kirsten, for your leadership over the past 12 years. Broadcom distributed a press release and financial tables after the market closed describing our financial performance for the second quarter fiscal year 2026. If you did not receive a copy, you may obtain the information from the investor section of Broadcom's website at broadcom.com. This conference call is being webcast live and an audio replay of the call can be accessed for 1 year through the Investors section of Broadcom's website. During the prepared comments, Hock and Kirsten will be providing details of our second quarter fiscal year 2026 results, guidance for our third quarter fiscal year 2026 as well as commentary regarding the business environment. We will take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with the SEC for information on risk factors that could cause our actual results to differ materially from the forward-looking statements made on this call. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. A reconciliation between GAAP and non-GAAP measures, to the extent possible, is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results. I will now turn the call over to Hock.
Thank you, Ji. Thank you, everyone, for joining today. In our fiscal Q2, 2026, total revenue reached a record $22.2 billion, up 48% year on year, above our guidance on strength in AI semiconductors. Q2 operating margin was a record 67%, and adjusted EBITDA was a record 69% of revenue, above our guidance. Even as our revenue scales up massively, driven by AI, our operating and EBITDA margins remain strong and stable. Turning to semiconductors: Q2 revenue for our Semiconductor Solutions segment was a record $15 billion, as I said before, representing 79% year-on-year growth. Driving this growth was AI semiconductor revenue at a record $10.8 billion, up 143% year on year and above our outlook. Networking represented almost 40% of our Q2 AI revenue. Demand for XPUs and networking is simply insatiable. During the quarter, bookings for AI semiconductors were over $30 billion against the $10.8 billion we shipped. In the second half of 2026, we expect AI semiconductor revenue to double from what we shipped in the first half of the year. Consistent with this trend, in Q3 we expect AI semiconductor revenue to accelerate to $16 billion, up over 200% year on year. For the full year 2026, we expect to achieve AI semiconductor revenue of $56 billion, up approximately 180% from fiscal 2025. We expect this momentum to continue into fiscal year 2027 and reiterate our AI semiconductor revenue guidance to be in excess of $100 billion. We expect AI semiconductor revenue growth to continue in fiscal 2028 based on the initiatives we have with our six core customers. As you are aware, with Google, we announced in April that we entered into a long-term agreement to develop and supply multiple generations of TPUs and AI networking. Our relationship continues to be strategic and very substantial as we continue to deliver vastly superior technology and execution compared to other alternatives. This ability to provide differentiated value to Google ensures that our business will sustain and grow for the foreseeable future. For Anthropic, for 2026 we are providing access to Broadcom TPU-based compute of over 1 gigawatt. In April, we entered into an agreement to enable Anthropic to access another 5 gigawatts of next-generation TPU-based compute beginning in 2027. For OpenAI, we have delivered silicon and we are on track for production late 2026. We have a contractual commitment to deploy 1.3 gigawatts in 2027 as part of the larger 10-gigawatt by 2029 agreement we announced last year. For Meta, in April we announced a partnership to deliver multiple generations of MTIA X XPUs. Under this agreement, we expect to deploy 3 gigawatts through the end of 2028. An initial order for 1 gigawatt, which includes XPUs and our networking, has been received and will start delivery in the second half of 2027. For our other two customers, we expect shipments to begin late 2026 and accelerate into 2027. To date, we have received purchase orders totaling $6 billion. While we have significant IP and execution leadership in XPUs, networking is key to building scalable XPU and GPU clusters. In networking, we have at least one generation of technology and product leadership. For scale-up within racks, we enable direct-attach copper based on an industry-leading 200G and 400G SerDes, driving co-packaged copper with Ethernet and PCI Express switches. For scale-out between racks, we have been shipping the industry's only 100-terabit Ethernet switch, the Tomahawk 6, for over a year. We will now be taping out our next-generation 200-terabit switch this quarter. In co-packaged optics (CPOs), 1.6-terabit DSPs, CW and EML lasers, we are the de facto standard in the industry. To extend AI clusters across data centers, we remain the industry leader with our Jericho 3 and Jericho 4 fabric solutions, enabling the world's largest deployments of multiple hyperscalers. Our strategic vision is to bring together Broadcom's leading technology and investor partners with the strongest balance sheets to deliver at scale sufficient compute capacity at the lowest cost and power for the leading AI frontier labs, including Anthropic and OpenAI. To deliver this vision, we are creating the AI XPU platform with Apollo, Blackstone, and other leading investors to deploy more than 20 gigawatts of compute capacity through 2027. The first tranche of this platform, valued at $35 billion, is currently being launched by Apollo. Now, turning to non-AI semiconductors: Q2 revenue of $4.2 billion was up 6% year on year. Bookings during the same period exceeded $6 billion, which is a clear indication we are on the path towards a full cyclical recovery. Broadband, server storage, and enterprise networking together were up, partially offset by seasonal decline in wireless. Consistent with this trend, in Q3 we forecast non-AI semiconductor revenue to be approximately $4.5 billion, up 12% from a year ago. In summary, we expect Q3 semiconductor revenue to be $20.5 billion, up 124% year on year. Let me turn to the Infrastructure Software segment. Q2 software revenue of $7.2 billion was up 9% year on year, in line with our guidance. Bookings continued to be strong as we sustained ARR growth of 17% year over year. For Q3, we forecast software revenue to be approximately $8.9 billion, up 31% year on year. We just released VMware Cloud Foundation 9.1, focused on improving infrastructure efficiency, security, and support for enterprise AI inferencing workloads. With strong server demand globally, the deployment of VCF 9.1 for on-prem cloud computing is extremely strong, driving robust revenue growth. This release adds heterogeneous compute support across GPU and CPU architectures, including AMD, Intel, and NVIDIA platforms, enabling enterprise cloud customers to run AI, Kubernetes, and traditional virtualized workloads on a common private cloud environment. So to sum it up, for Q3 2026, we expect our consolidated revenue to grow to $29.4 billion, up 84% year on year. We expect operating margin to be stable at approximately 67% of revenue and adjusted EBITDA to be at approximately 68% of revenue. With that, let me turn the call over to Kirsten.
Thank you, Hock. Let me now provide additional detail on our Q2 financial performance. Consolidated revenue was a record $22.2 billion for the quarter, up 48% from a year ago. Gross margin was 77.1% of revenue in the quarter, down 32 basis points year on year as semiconductor became a larger proportion of our product mix. Consolidated operating expenses were $2.2 billion, of which $1.6 billion was R&D. Q2 operating income was a record $14.9 billion, up 52% from a year ago. Note that even with the decline in gross margin, operating margin increased 200 basis points year over year. Expenses remained relatively flat at 67.3% and adjusted EBITDA of $15.2 billion, or 69% of revenue, was above our guidance of 68%. Now a review of the P&L for our two segments, starting with semiconductors. Revenue for our Semiconductor Solutions segment was a record $15 billion, with growth accelerating to 79% year on year driven by AI. Semiconductor revenue represented 68% of total revenue in the quarter, and AI semiconductor revenue represented 49% of total revenue. Gross margin for our Semiconductor Solutions segment was approximately 70%. Operating expenses of $1.2 billion reflected increased investment in R&D for leading-edge AI semiconductors and represented 8% of revenue. Semiconductor operating margin of 62% was up 460 basis points year on year, reflecting our strong operating leverage. Now moving on to Infrastructure Software: revenue of $7.2 billion was up 9% year on year and represented 32% of revenue. Gross margin for Infrastructure Software was 93% in the quarter, and operating expenses were $1 billion in the quarter. Q2 software operating margin was up 310 basis points year on year to approximately 79%. Moving on to cash flow: free cash flow in the quarter was a record $10.3 billion and represented 46% of revenue. We spent $231 million on capital expenditures. We ended the second quarter with $19.6 billion of cash compared to $14.2 billion in the prior quarter. We ended the second quarter with inventory of $4.3 billion as we continue to secure supply to support strong AI demand. Our days of inventory on hand were 86 days in Q2, compared to 68 days in Q1, in anticipation of accelerating AI semiconductor growth in the second half of the year. Turning to capital allocation: in Q2, we paid stockholders $3.1 billion of cash dividends based on a quarterly common stock cash dividend of $0.65 per share. Now moving to guidance: our guidance for Q3 is consolidated revenue of $29.4 billion, up 84% year on year. We forecast semiconductor revenue of approximately $20.5 billion, up 124% year on year. Within this, we expect Q3 AI semiconductor revenue of $16 billion, up over 200% year on year. We expect Q3 Infrastructure Software revenue of approximately $8.9 billion, up 31% year on year. Moving on to margins: as the proportion of AI revenue significantly grows in Q3, we expect Q3 consolidated gross margin to be down to approximately 74%. This decline in gross margin does not represent a structural change in semiconductor margin. Rather, it reflects product mix between semiconductors and Infrastructure Software. Regardless of the impact to gross margin, we expect Q3 operating margin to be 67%, which is flat quarter on quarter, demonstrating our strong operating leverage. We highly recommend that investors model semiconductor and Infrastructure Software margins separately to properly reflect the impact of changes in total revenue mix going forward. We expect the non-GAAP tax rate for Q3 and fiscal year 2026 to be approximately 16% due to the impact of the global minimum tax and the geographic mix of income compared to that of fiscal year 2025. We expect the non-GAAP diluted share count in Q3 to be approximately 4.94 billion shares, excluding the impact of potential share repurchases. That concludes my prepared remarks.
分析師問答
Operator, please open up the call for questions. Thank you. Due to time restraints, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. And our first question will come from the line of Harlan Sur with JPMorgan.
Your line is open. Yes, good afternoon. Thank you for taking my question. Thanks for all your support, Kirsten. And Amy, welcome to the team. First, just a quick housekeeping item. Hock, on this fiscal year, AI sort of two-times growth second half over first half, that would put AI revenues over $60 billion with sequential growth in fiscal Q4, but you gave us the $56 billion number, which is only about 1.5x half-over-half growth with Q4 AI actually being down sequentially. So if you could just help us kind of square the numbers there. And then for my real question: last year, you talked about an AI backlog for the next 18 months of $73 billion. The market sort of took that number and spread that linearly over six quarters, but we know that the backlog is always more front-loaded over the first four quarters. And sure enough, you are going to deliver around 80% or more of that backlog in this fiscal year or first four quarters. Just given the strength of all your programs, the broadening of the customer base, accelerating year-over-year trends in your AI shipments, all the multi-gigawatt partnerships that you just articulated today, most of which are set to start to fire next year, is it fair to assume that your 18-month backlog, second half of this year through all of fiscal 2027, sits at $200 billion or better?
That is a very complicated set of questions. To begin with, let's start with 2026. If you do the math, basically two-times the first half: we shipped in total AI revenue something in the range of $19 billion in the first half. If you do what I indicated, two-times that, the second half gets to pretty much in the range of what we are talking about, which is around $56 billion, Harlan. So that set of numbers does tie up very well. Now on the second question, which requires a very detailed analysis: we do expect to keep the momentum going into 2027 and to see continued growth. If you extrapolate based on what we are seeing here, almost two-times what 2026 will be, I think you will easily see that 2027 will exceed, very easily, $100 billion in 2027, which is what we indicated last quarter, and we continue to say that it will be over $100 billion in 2027. So in that sense, if anything, it might be stronger. But we are not trying to guide you every quarter on what 2027 would be like. So we basically say we continue to expect in excess of $100 billion in 2027, and it is on the same trajectory as we are seeing in the back half of 2026.
Got it. Okay. Thank you, Hock.
One moment for our next question. And that will come from the line of Blayne Curtis with Jefferies. Your line is open.
Hock, I wanted to ask you on the quarter, you had that 8-K with the long-term agreement with Google. I think, obviously, you are probably not going to tell me what the total value is there, but I think there is a lot of concern about share within that customer. I was just kind of curious: now that you have this agreement, maybe you could speak to a little bit more in terms of your confidence and if there is upside with that customer. Is it a fixed amount or are there shares? Is there any way you can kind of add some color to that agreement?
It is a very, very strong agreement, and it basically reflects the strength of the partnership we have because of the products we deliver, the multigenerational products, and the intellectual property we deploy into this whole program. To answer your questions specifically: it is a commitment that is very substantial in dollars. Now, we also accept the fact that while we like to win every design in that program, given the rate of growth of development and consumption of AI compute by our partner Google, we fully expect that there will be some diversity of sources for them. But our commitment from them is a very substantial dollar amount.
One moment for our next question. And that will come from the line of Ross Seymore with Deutsche Bank. Your line is open.
Hi, thanks for allowing the question and congrats to both Kirsten and Amy. Question on the gross margin side of things. I know, Kirsten, you talked about it going down due to the mix dynamics within the semis versus the software side. But given the strength on the software side in the quarter, it seems like gross margin is falling a little bit harder. So behind the scenes, can you just talk a little bit about what the drivers within semis are? Is that the ex versus the networking side of things? And is that trend likely to continue next year? Are there rack-scale versus chip-scale dynamics? Any color you could give on that would be helpful.
Yes. Certainly. As our semiconductor business grows on a consolidated basis relative to our software business, you are going to have some decline in consolidated gross margin as the mix shifts to semiconductors. You will have some compression, but remember that it is accretive because we have strong operating leverage, so our operating margins will hold up over time. Within semiconductors, we have always said our ASICs, TPUs, and some of the wireless business have lower margins. So as the TPUs continue to accelerate, there will be pressure overall on gross margin. But the connectivity side, the AI networking side of the business, has very rich margins, so it will offset some of that pressure as we go.
Ross, as Kirsten said in her remarks, structurally the semiconductor margins remain very stable and solid. It is the mix—particularly the mix between software and the very rapidly growing AI semiconductors—that is diluting consolidated gross margin.
In the rack versus chip side of things, is that all clarified now?
No racks. It is all chip business only. We only do chips. Only chips.
One moment for our next question. And that will come from the line of Benjamin Reitzes with Melius. Your line is open.
Yeah. Hey, guys. Thanks. Appreciate it. Wanted to ask about 2027, Hock. With regard—previously you talked about the TAM being a longer-term question. It seems that one of your competitors talked recently about the TAM per gigawatt going up a lot as we go throughout the decade. It seems it was not just due to infrastructure but due to compute and networking components and other things. Perhaps you are familiar with that comment that Jensen made, where the overall infrastructure is going from something around 50-something towards 100, and the compute content going way up. Are you seeing the same thing as you go throughout the long term? Is that potentially being an accelerator to what you have already outlined in terms of your TAM per gigawatt? And how are you thinking about that?
Sure. When you talk about dollars per gigawatt—the content dollars per gigawatt—they are not accelerating that much simply because chips are drawing higher power, so you are driving fewer chips per rack while the ASP per chip is going up. So dollars per gigawatt in terms of billions per gigawatt are relatively stable. But the number of gigawatts required is accelerating quickly. We are seeing that in our customer engagements. For customers such as Anthropic and OpenAI, the compute capacity they require, measured in gigawatt power, is far ahead of what we expected six months ago. And that is just these customers; fold in Google, Meta, and our other customers, and you are talking about gigawatts in totality that will continue to grow. We expect 2028 to show substantial growth beyond what we are forecasting for 2027.
One moment for our next question. And that will come from the line of Timothy Arcuri with UBS. Your line is open.
Thanks a lot, Hock. I wanted to ask you about supply and your ability to get incremental volume of wafers and HBM. As I look at some of your competitors, they are kind of able to drop $20 billion out of thin air and get incremental wafer supply. So I am wondering: do you feel pretty good about, if a customer comes to you, are you able to get up in terms of wafers and HBM? And are you beginning to consider maybe using other foundries to add more optionality to your supply? Thanks a lot.
Getting supply is not just about dropping money, though that does help. We are very comfortable that we have been able to secure supply of the types you mentioned for our needs for 2026 and 2027, and we are working on 2028 and 2029 right now. Customers have been coming to us incrementally over the last few months. We expect that to continue. By and large, yes, we can go to our suppliers and secure the supply required.
One moment for our next question. And that will come from the line of Stacy Rasgon with Bernstein Research. Your line is open.
Hi, guys. Thanks for taking my question. Hock, you gave some gigawatt shipment targets for next year for your various customers. I just want to know, are those any different? Do they contemplate any change from what you said last quarter? I think you said that you were going to ship close to 10 gigawatts in 2027. Can you just sort of help us shape the year? It sounded to me like you expect that to be more back-half loaded in 2027 given the shape of the ramps. But most importantly, is there any change—are there more gigawatts or fewer gigawatts or the same gigawatts versus what you were suggesting last quarter?
Good question. For 2027, we indicated about 10 gigawatts of shipments in 2027. That is still very much intact. We are planning to ship 10 gigawatts in 2027 and nothing has changed. It will be back-half loaded to that extent, which provides an interesting trajectory into 2028 with more gigawatts expected in 2028.
One moment for our next question. And that will come from the line of James (Jim) Schneider with Goldman Sachs. Your line is open.
Good afternoon. Thanks for taking my question. I was wondering if you could comment a little bit on the profile of your networking business, Hock. As we head through fiscal 2026 and 2027—about 40% of AI revenue this quarter—will you expect that to fall back down as some of these custom ramps ramp up into the end of the year and into early next year? Would you expect it to stay at the upper end of that range? And maybe you can talk about when you see some of the optical and CPO revenue becoming meaningful. Thank you.
That is a great question, Jim, and it is difficult to answer precisely because there are many moving parts. One thing: as more customers turn to XPUs, XPUs use a lot of our networking components across the board, so that is positive. At the same time, we have been able to sell networking into non-XPU footprints, which will dilute the percentage. The 40% number is a situation where stars are aligned—we are shipping a lot of networking to non-XPU deployments while XPU growth allows networking consumption to rise. I see 40% as probably the high end for networking as a percentage of AI revenue. Over time, I expect the percentage of networking as a share of total AI revenue to be closer to around 30%. In terms of optical and CPO revenue, those elements are increasingly meaningful as deployments scale, and we are already the de facto standard in many CPO components.
One moment for our next question. That will come from the line of Thomas O'Malley with Barclays. Your line is open.
Hey, Hock. Thanks for taking the question. I noticed with the most recent deal with Anthropic that you guys are using Broadcom chips as a backstop for the deal. Do you expect more deals to come like this in the future? And as you start to see the AI environment, is there any way you are thinking about financing in the future? Are you going to continue to do it with chips or is there anything else you can offer on that? Thank you.
I need to correct you on that. Our deal with Anthropic disclosed in our 8-K is that we will use our TPU chips to provide compute capacity to Anthropic. It was not that our chips were a backstop. We are providing the chips and the compute capacity to Anthropic. As for whether more deals will be structured this way, we are creating an XPU platform with partners to enable frontier model customers to access funded compute capacity when needed. That can take different forms, but in the Anthropic example, we are providing the compute via our chips.
One moment for our next question. And that will come from the line of Christopher Muse with Cantor Fitzgerald. Your line is open.
Yeah, good afternoon. Thanks for taking the question. Hock, in recent years you have talked about focusing efforts on very large XPU platforms. We are seeing many XPU-attached derivatives across interconnect, storage, and other areas. I am wondering if there are any programs that are more niche that are whetting your appetite?
No, I don't think so. Our business model is straightforward: we are developing XPUs—customer AI accelerators—for use by our customers, who are primarily frontier model developers, for training or inference. We are also creating a portfolio of critical components to enable these XPUs and GPUs to be clustered and to achieve better performance, including switches, PCI Express components, connectors, DSPs, lasers, NICs, and routers. That continues to be our model in semiconductors. In addition, to enable some of these frontier model players to access the volumes of compute capacity they need, we are creating, in partnership with investors with strong balance sheets, a vehicle to have these chips funded for these customers, who otherwise might have difficulty accessing our technology at the necessary scale.
That will come from the line of Atif Malik with Citi. Your line is open.
Hi, thank you for taking my question. I have a question on the Infrastructure Software business. Are you seeing any impact of AI or generative AI on your software growth and renewals? And can you just talk about some longer-term growth expectations for that business?
We are not seeing a negative impact. If anything, as I reported, the higher core-count CPU and GPU server demand is driving accelerated growth in our VMware business. We see this accelerating into the next multiple quarters as demand picks up. Long term, given that our Infrastructure Software products are very close to hardware—essentially hypervisor and platform-level software—we do not expect disruption in our software products from AI; instead, we expect tailwinds from increased demand for on-prem and private cloud deployments that support AI workloads.
And one moment for our next question. That will come from the line of Edward Snyder with Charter Equity Research. Your line is open.
Thanks a lot. Hock, the gigawatts you have laid out for different customers make it clear that Anthropic and OpenAI have very large gigawatt commitments in the out years. I know part of that is catch-up because they started later, whereas your oldest customer has been doing this for some time. But even part of Google's offering cloud services to other folks too. Are we seeing a shift where there will be a big second wave of demand driven as AI starts hitting enterprises and consumers get access to usable tools? The numbers you are saying here are significantly different for the two classes of customers.
That's an interesting observation and you may be right that enterprise consumption of AI is still relatively early. However, much of enterprise AI consumption today is using tokens or APIs from the frontier model platforms—OpenAI, Google (Vertex/Bedrock), and others. As those frontier model providers productize their models, enterprises and consumers will consume through those platforms, which drives demand back to the compute capacity we provide. So even as enterprise consumption grows, the primary source of large-scale compute demand remains the frontier model developers and the products they deliver. While some enterprises may deploy their own dedicated XPUs, most demand will continue to originate from the platforms and model providers that serve enterprises and consumers.
One moment for our next question. And that will come from the line of Joe Moore with Morgan Stanley. Your line is open.
Thank you. You talked about $30 billion of AI bookings in the quarter, which is a lot relative to the quarter and next quarter shipments. Can you talk about the dynamic? Why is there so much backlog now? You said you can react to upside supply, but why so many bookings this quarter relative to revenue?
There is huge demand for compute. Our large customers understand lead times for compute—they need lead time for wafers, memory, power infrastructure, and facility-level planning. Many are placing large orders now for future delivery, not immediate delivery, because they must align other elements like power and facility capacity. This gives us a lot more visibility than we normally would have in semiconductors. Our visibility now extends into 2028. The bookings are a reflection of customers planning ahead to secure capacity, not due to component shortages alone but due to the full system planning required to deploy large-scale AI compute.
Thank you. We do have time for one final question. And that will come from the line of Joshua Buchalter with TD Cowen. Your line is open.
In the past, you talked about $15 billion to $20 billion per gigawatt of compute. Given the 10 gigawatts you implied you would be doing next year and the implications for revenue, how should we think about the evolution of your revenue per gigawatt over time? On one hand, generation-to-generation pricing may increase on programs you are already shipping, and on the other hand there are other projects entering the model. How should we think about revenue per gigawatt evolving?
Our content per gigawatt will increase over time. XPU compute chips will increase in content and price as we integrate more capabilities—more HBM, embedded CPU cores, multi-die designs—and these enhancements raise the revenue content per gigawatt generation-to-generation. It will not rise every month or quarter, but over generations of product, content per gigawatt will trend up.
I would now like to turn the call over to Ji Yoo, Head of Investor Relations, for closing remarks.
Thank you, operator. Broadcom currently plans to report its earnings for the third quarter of fiscal year 2026 after close of market on Wednesday, September 2, 2026. A public webcast of Broadcom's earnings conference call will follow at 2 p.m. Pacific Time. That will conclude our earnings call today. Thank you all for joining.
Operator, you may end the call. This concludes today's program. Thank you all for participating. You may now disconnect.