Broadcom’s AVGO Semiconductor business is benefiting from the strong AI revenues, which surged 106% year over year in the first quarter of fiscal 2026. AI networking revenues grew 60% year over year and represented one-third of AI revenues. 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 custom accelerators (XPUs).
An expanding portfolio bodes well for Broadcom’s prospects. The company has 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. AVGO has also extended a partnership with Meta Platforms META under which the companies will co-develop multiple generations of META’s custom AI chips (MTIA). AVGO will provide its XPU platform and advanced networking technologies to help Meta Platforms build a high-performance AI infrastructure. The partnership includes an initial deployment exceeding 1 gigawatt of computing capacity, with plans to scale to multiple gigawatts over time.
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 $22.04 billion, suggesting 46.9% 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.
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.
AVGO’s Share Price Performance, Valuation & Estimates
Broadcom shares have appreciated 15.5% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 7.8%.
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 14.88X compared with the broader sector’s 6.5X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $11.45 per share, up 0.8% over the past 30 days, suggesting 67.9% growth from the figure reported in fiscal 2025.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
Broadcom currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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