BroadcomAVGO reported third-quarter fiscal 2026 non-GAAP earnings of $3.32 per share, up 96.4% year over year and 3.11% above the Zacks Consensus Estimate. 
Revenues surged 85.5% year over year to $29.59 billion and beat the consensus mark by 0.41%. Strong custom AI accelerator and networking demand drove the quarterly results. AI semiconductor revenues jumped 221% year over year to $16.7 billion.

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AVGO's AI Semiconductor Growth Accelerates

AI semiconductor revenues represented 56% of total revenues. XPU shipments increased more than 3.5 times year over year and accounted for 73% of AI revenues, while AI networking revenues rose more than 2.5 times.

Broadcom shipped Ironwood TPU v7 in high volume to Anthropic and Google, began production shipments of Google's next-generation TPU v8i and shipped OpenAI's first-generation Jalapeno custom accelerator. AVGO expects Meta's MTIA accelerator to enter production shipments in the fourth quarter.

Semiconductor Solutions revenues surged 127% year over year to a record $20.84 billion and represented 70% of total revenues. Non-AI semiconductor revenues were $4.2 billion, up 5% year over year and flat sequentially.

The segment's operating margin rose 440 basis points (bps) year over year to 61% as revenue growth outpaced operating expense growth. Broadcom continues to invest in research and development while expanding capacity for substrates and optical components to support semiconductor demand.

AVGO's Software Business Extends Growth

Infrastructure Software revenues increased 29% year over year to $8.75 billion and contributed 30% of total revenues. Annualized recurring revenue (ARR) grew 15% year over year.

Software operating margin expanded 650 bps year over year to roughly 84%. 

Broadcom also introduced VMware Private AI Cloud, aimed at letting enterprises run AI alongside existing applications while maintaining security, compliance and control over data.

Broadcom Expands Operating Profitability

Non-GAAP gross margin was $22.19 billion, translating to a 75% gross margin. The margin declined 210 bps sequentially as AI semiconductor revenues became a larger part of the sales mix.

Non-GAAP operating expenses were $2.1 billion compared with $2.04 billion a year earlier.

Non-GAAP operating income increased 92% year over year to $20.1 billion, while the operating margin reached 67.9%, reflecting operating leverage from the sharp revenue increase.