Broadcom's AI Push Boosts Semiconductor Sales: More Upside Ahead?

Broadcom’s AVGO Semiconductor solutions revenues jumped 52% year over year to $12.52 billion in the first quarter of fiscal 2026. Semiconductor revenues accounted for 64.8% of net revenues that appreciated 29.5% year over year to $19.31 billion. The uptick in Semiconductor revenues was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues. AVGO’s revenues from custom accelerators (XPUs) jumped 140% year over year.

The company continues to gain market share in AI networking, driven by strong adoption of Tomahawk 6 switch as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers. Tomahawk 6 family switch series is now shipping in production volume. Tomahawk 6 doubles the throughput of its predecessor, Tomahawk 5, and is highly optimized for scale-out and scale-up AI networks used for training and inference. Tomahawk 6 delivers exceptional flexibility with support for 100G and 200G SerDes. It provides one of the industry’s most comprehensive sets of AI routing capabilities and interconnect options, built to handle the demand of AI clusters scaling beyond one million XPUs.

An expanding portfolio bodes well for Broadcom’s prospects. At the ongoing 2026 Optical Fiber Communications Conference, the company introduced 3.5D XPU, 102.4T Ethernet switches with co-packaged optics, 400G/lane optical DSPs, 200G/lane Ethernet retimers and AECs, and PCIe Gen6 connectivity solutions.

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 facing stiff competition from NVIDIA NVDA and Advanced Micro Devices AMD in the semiconductor space.

NVIDIA is benefiting from the strong growth of AI and high-performance accelerated computing. The growing demand for generative AI and large language models using GPUs based on NVIDIA’s Hopper and Blackwell architectures is aiding data center revenues. The company’s latest Blackwell Ultra GPUs deliver up to 25 times the token throughput for AI inference compared to Hopper 100, which strengthens NVIDIA’s dominance in AI-driven computing. In the fourth quarter of fiscal 2026, revenues from Data Center jumped 75% year over year and 22% sequentially to $62.31 billion. Data Center revenues accounted for 91.5% of NVDA’s revenues.

AMD’s prospects are benefiting from strong demand for EPYC processors that power cloud and enterprise workloads. Emerging AI use cases and rapid adoption of agentic AI are generating demand for general-purpose compute infrastructure, benefiting EPYC demand. Apart from EPYC, AMD’s prospects are driven by strong demand for Instinct accelerators. The launch of the Instinct MI350 series that supports deployments powered by AMD CPUs, GPUs and NICs has strengthened AMD’s system-level capabilities. In the fourth quarter of 2025, Data Center revenues increased 39.4% year over year to $5.38 billion and accounted for 52.4% of total revenues.

AVGO’s Share Price Performance, Valuation & Estimates

Broadcom shares have appreciated 65.4% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 33.6%.

AVGO Stock Outperforms Sector

Image Source: Zacks Investment Research

The AVGO stock is trading at a premium, with a forward 12-month price/sales of 12.64X compared with the broader sector’s 6.12X. Broadcom has a Value Score of D.

AVGO Stock Has a Stretched Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for the second quarter of fiscal 2026 earnings is pegged at $2.35 per share, up 7.8% over the past 30 days, suggesting 48.7% growth from the figure reported in the year-ago quarter.

Broadcom Inc. Price and Consensus

Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote

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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