AI Chip Revenue Jumps 106% in Broadcom Q1

On March 4, after U.S. market close, Broadcom released its Q1 FY2026 earnings, surpassing market expectations and sending its stock up over 4%.

The semiconductor giant reported Q1 revenue of $19.3 billion, up 29% year-over-year and above analysts' $19.26 billion forecast, marking a record high. Adjusted EBITDA rose 30% to $13.1 billion, also a record, while adjusted EPS reached $2.05, beating the $2.03 estimate.

At the end of Q1, Broadcom held $14.17 billion in cash and equivalents, down from $16.18 billion last quarter. Operating activities generated $8.26 billion, and capital expenditures totaled $0.25 billion, resulting in $8.01 billion in free cash flow. The board approved a $0.65 quarterly dividend per share, payable March 31 to shareholders of record as of March 23, along with a new $10 billion stock repurchase program through December 31.

Looking ahead, Broadcom projects strong AI chip demand in Q2 FY2026. Revenue is expected around $22 billion, up 47% year-over-year and exceeding the $20.5 billion analyst estimate. Adjusted EBITDA is projected at roughly 68% of revenue.

The company benefits from an AI infrastructure investment boom, with tech giants like Microsoft, Amazon, and Meta anticipated to spend at least $630 billion this year, boosting demand for Broadcom chips, servers, storage, and networking gear. Broadcom also expects to sell at least 1 million 3D-stacked AI chips by 2027, with tenfold gains in computing speed and energy efficiency. These chips, produced by TSMC, will serve major clients including Google and OpenAI.