AVGO Boosts AI Growth With New Optical, Ethernet Tech: What's Ahead?
Broadcom AVGO is expanding its portfolio of open, scalable and energy-efficient AI infrastructure solutions with the introduction of advanced technologies at the ongoing 2026 Optical Fiber Communications Conference (OFC). The lineup includes 3.5D XPU, 102.4T Ethernet switches with co-packaged optics (CPO), 400G/lane optical DSPs, 200G/lane Ethernet retimers and AECs, and PCIe Gen6 connectivity solutions.
At OFC, held between March 15 and 19 in Los Angeles, BroadcomAVGO-- is introducing Taurus, the industry’s first 400G/lane optical DSP. Combined with its 400G electro-absorption modulated laser and photodiodes, the solution enables cost-effective, low-power 1.6T optical transceivers while paving the way for future 3.2T designs and next-generation 204.8T switching platforms. Broadcom’s 3.5D XDSiP platform — already in production — combines 2.5D and 3D integration technologies to deliver high performance and efficiency for AI accelerators.
AVGO’s Ethernet portfolio includes the 102.4T Tomahawk 6 switch, Tomahawk Ultra with ultra-low latency and Jericho 4 for large-scale, secure AI fabrics. The Thor Ultra 800G NIC further enhances performance for Ultra Ethernet Consortium-compliant networks. Additional highlights include 200G/lane VCSEL, EML and CPO solutions, as well as a 3.2T VCSEL-based near-packaged optics platform. Broadcom is also advancing connectivity with 200G/lane Ethernet retimers, extended AECs, and PCIe Gen6 switches featuring enhanced telemetry and orchestration capabilities.
Strong Portfolio to Boost AVGO’s Top-Line Growth
A strong portfolio is helping in driving up Broadcom’s revenues. In the first quarter of fiscal 2026, AVGO’s revenues from custom accelerators jumped 140% year over year. The momentum is expected to continue in the second quarter of fiscal 2026, thanks to a robust clientele. The company continues to gain market share in AI networking, driven by the first-to-market Tomahawk 6 switch at 100 terabit per second, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers. Tomahawk 6 family switch series is now shipping in production volume.
Broadcom expects a positive second-quarter fiscal 2026 performance, with AI revenues of $10.7 billion, suggesting a 140% year-over-year upsurge. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of the total AI revenues. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth for the second quarter of fiscal 2026. The Zacks Consensus Estimate for revenues is currently pegged at $22.02 billion, suggesting 46.8% growth from the figure reported in the year-ago quarter.
AVGO Faces Tough Competition in the Semiconductor Market
Broadcom is a major player in the semiconductor market, but is facing stiff competition from NVIDIA NVDA and Skyworks SWKS.
NVIDIA is benefiting from the strong growth of AI and high-performance accelerated computing. The growing demand for Gen AI and large language models using GPUs based on NVIDIA’s Hopper and Blackwell architectures is aiding data center revenues. In the fourth quarter of fiscal 2026, revenues from Data Center (which accounted for 91.5% of NVDA’s revenues) jumped 75% year over year and 22% sequentially to $62.31 billion.
Skyworks’ products are designed for high-growth areas across a wide range of end markets, including connected vehicles, enterprise infrastructure, satellite communications, data center networking and emerging edge AI applications. In data center infrastructure, demand signals are improving across the SWKS customer base, supported by increasing design win activity. Timing and power management content is expanding as the ecosystem transitions to next-generation 800-gig and emerging 1.6-terabit architectures.
AVGO’s Share Price Performance, Valuation & Estimates
Broadcom shares have appreciated 72.7% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 34.1%.
AVGO Stock Outperforms Sector
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The AVGOAVGO-- stock is trading at a premium, with a forward 12-month price/earnings of 24.57X compared with the broader sector’s 24.06X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
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The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $11.12 per share, up 10.6% over the past 30 days, suggesting 63.1% growth from fiscal 2025’s reported figure.
Broadcom currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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