Broadcom Inc (AVGO) - Stock Report

Pricing as of 15 June 2026 close: Q2 FY2026 was genuinely strong. Revenue rose 48% to $22.187bn, adjusted EBITDA reached $15.244bn or 69% of revenue, reported diluted EPS was $1.91 and adjusted diluted EPS was $2.44. Company-reported free cash flow was $10.262bn after $231m of capex, so post-capex cash for the quarter covered roughly $3.7bn of dividends and buybacks by about $6.6bn. The reported quarter also included $118m of Other income, net below operating income, while the first half included a $315m excise tax benefit; those items are outside the core AI/VMware operating cash proof. The quarter should still not be annualized mechanically: Q3 guidance of about $29.4bn revenue and $16.0bn of AI semiconductor revenue is the market-moving proof item, while the June 2026 AI-rack financing backstop adds a new cash-conversion and credit-risk test.

The key macro issue is not AI infrastructure demand in isolation, but whether hyperscaler spending keeps passing through Broadcom’s custom silicon, networking and VMware mix into retained free cash flow per share; if customer concentration, financing exposure or supply-chain pressure interrupts that bridge, the same AI growth story can justify a lower multiple.

Broadcom is no longer just a diversified chip supplier. It combines two large engines: semiconductor solutions for AI data centers, networking, wireless, broadband, storage and industrial markets, and infrastructure software built around VMware, mainframe, security, FC SAN and private-cloud infrastructure.

The semiconductor engine earns its economics through custom AI accelerators, network switches, connectivity silicon, product qualification cycles and customer-specific roadmaps. It can grow very fast when hyperscale AI spending is expanding, but it also concentrates revenue around a small group of customers and a constrained manufacturing chain. The software engine plays a different role. VMware and the legacy infrastructure software portfolio are the margin stabilizers: they bring renewal economics, upfront license revenue, support streams and customer switching costs.

That software cash flow matters because Broadcom still carries acquisition debt and because AI hardware growth can require larger working-capital, supply-chain and financing commitments than a simple fabless-chip story suggests.