Broadcom Misses Revenue Estimates as Software Division Disappoints

CNBC reported Wednesday that Broadcom posted a Broadcom revenue miss in its fiscal second quarter, falling just short of Wall Street expectations and sending shares lower in after-hours trade. Total sales reached $22.19 billion against a consensus estimate of $22.27 billion.

AI Chips Surge but Software Drags on the Quarter

Despite the headline miss, Broadcom’s semiconductor solutions division beat expectations. Chip revenue came in at $15.1 billion, ahead of a $14.72 billion forecast. AI-related revenue more than doubled year-over-year to $10.8 billion. CEO Hock Tan credited the gains to strong demand for custom AI accelerators and the networking components that connect them.

The weak link was enterprise software. Infrastructure software revenue reached $7.18 billion, a 9% annual gain but roughly $140 million shy of analyst estimates. That shortfall was enough to drag the overall result below the consensus line.

Also Read: Nvidia Earnings Preview: What Wall Street Expects from the AI Chip Giant

Background: A Stock Transformed by the AI Boom

Broadcom’s trajectory over the past three years has been remarkable. The stock has risen nearly ninefold since late 2022, when the launch of ChatGPT ignited broad investor appetite for AI infrastructure. Shares are up roughly 40% so far in 2026, easily outpacing the Nasdaq’s 16% gain over the same stretch.

The company expanded aggressively beyond chips with its $69 billion acquisition of VMware in 2023, giving it a substantial enterprise software base. That software arm now accounts for nearly a third of total revenue, making its performance increasingly important to quarterly results.

Also Read: What the VMware Integration Means for Broadcom’s Long-Term Margins

Guidance Points to a Sharp AI Revenue Jump Ahead

The company’s forward outlook offered investors a reason for optimism. Broadcom guided for roughly $29.4 billion in revenue next quarter, ahead of the $28.53 billion Wall Street had penciled in. Tan said AI revenue alone is expected to reach $16 billion in the coming quarter. That figure would represent a tripling from the $10.8 billion posted this quarter.

Net income for the quarter hit $9.31 billion, up 88% from a year earlier. Adjusted earnings per share came in at $2.44, ahead of the $2.40 consensus estimate.

Cloud giants including Amazon, Meta, and Microsoft are increasingly designing their own silicon, fueling demand for Broadcom’s custom chip design services and intellectual property.

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