---
title: "AVGO: AI firing on all cylinders; a fiercer rival to NVDA?

---"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/39070789.md"
description: "AVGO released Q1 FY26 results (ended Jan 2026) after-hours on Mar 5 (Beijing time). 1) Overall performance: revenue was $19.3bn, +29% YoY, in line with market expectations ($19.2bn).Revenue rose $1.3bn QoQ, mainly driven by AI. GPM was 68.1%. Excluding acquisition-related amortization and restructuring charges, Adj. GPM was 75.8%..."
datetime: "2026-03-05T01:53:23.000Z"
locales:
  - [en](https://longbridge.com/en/topics/39070789.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/39070789.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/39070789.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/topics/39070789.md) | [繁體中文](https://longbridge.com/zh-HK/topics/39070789.md)


# AVGO: AI firing on all cylinders; a fiercer rival to NVDA?

---

AVGO released Q1 FY26 results (ended Jan 2026) after the US market close on Mar 5 (Beijing time). Details follow.

**1\. Overall results**: **Q1 revenue was $19.3bn (+29% YoY), in line with the Street ($19.2bn)**. QoQ rose by $1.3bn, driven by AI. GPM was 68.1%. **On an operating basis (ex acquisition amortization and restructuring), GPM was 75.8%, down 80bps QoQ**, reflecting mix shift as custom ASICs carry lower margins.

**2\. Semiconductor**: **Revenue was $12.5bn, up $1.5bn QoQ**, with AI contributing most of the increment. Details:

**①**$Broadcom(AVGO.US) **AI: $8.4bn, up $1.9bn QoQ, ahead of the Street ($8.2bn)**. Growth was led by higher Google TPU shipments across the quarter. **Google and Meta have recently raised 2026 capex outlooks, and AVGO expects AI revenue of $10.7bn next quarter, up $2.3bn QoQ**.

**② Non-AI: $4.1bn, roughly flat YoY**. Non-AI trends were stable.

**3\. Infrastructure software**: Revenue was $6.8bn, +1.4% YoY. Earlier growth stemmed from VMware integration and pricing changes (moving from perpetual licenses to subscriptions). **The M&A-driven surge has ended, and future growth will hinge on VMware’s subscription-led organic expansion**.

**4\. Opex**: Core opex (R&D + S&M) was $3.98bn, down slightly QoQ. Scale benefits helped lower core opex ratio to ~21%. Over the past two years, stock-based comp has increased materially (now nearly half of opex). Ex SBC, core opex was $2.04bn, down $90mn QoQ.

**5\. Inventory: $2.96bn this quarter, up 30% QoQ**. Unlike the usual single-digit QoQ moves, **the jump reflects strong demand and deliberate early stocking**.

**6\. VMware integration**: Dolphin Research tracks Total Debt/LTM Adj. EBITDA, which fell further to 2 this quarter. The ratio has returned to pre-acquisition levels, indicating VMware’s debt impact has been absorbed within two years.

**7\. Guidance**: **Q2 FY26 revenue is guided to around $22.0bn, above the Street ($20.8bn), with Adj. EBITDA margin at 68% vs. Street 67%. AI revenue is expected to rise to $10.7bn next quarter**.

**Dolphin Research view: AI growth accelerates; explicit guidance lifts confidence**

AVGO’s revenue and margins met expectations. Top-line growth was **primarily driven by AI**. **On an operating basis, GPM was 75.8%**, down slightly QoQ due to the larger mix of lower-margin ASICs.

**For next quarter, revenue is guided to $22.0bn, up $2.7bn QoQ and above consensus ($20.8bn)**. Growth should be led by AI.

**1) M&A impacts:** **Total Debt/LTM Adj. EBITDA fell to 2, back to pre-deal levels, indicating VMware’s debt impact was absorbed within two years**.

**2) AI performance**: AI revenue was $8.4bn this quarter, up $1.9bn QoQ. **Management guides Q2 AI revenue of $10.7bn, up $2.3bn QoQ, above the Street ($9.7bn)**.

**With VMware integration done, investor focus is squarely on AVGO’s AI trajectory**:

**a) Hyperscaler capex is the engine**: Hyperscalers are the key buyers of AVGO custom ASICs, directly shaping AI expectations. **Based on guidance, Dolphin Research estimates combined 2026 capex of Google, Meta, Microsoft and Amazon could reach $660bn, with YoY growth over 60%, underpinning the AI chip market**.

**b) AI chip share**: Nvidia remains dominant, with AVGO playing catch-up. **AVGO’s AI chip share is ~10% today and could rise toward ~20%, supported by demand from Google TPU and Anthropic**.

**c) Product iteration**: AVGO has secured orders from Google, Meta and OpenAI. **Google’s TPU is the core product currently, and its performance will directly drive AI revenue**.

TPUv7 is in mass production. Versus Nvidia GPUs, **TPUv7 in FP8 is broadly comparable to Nvidia’s B200 (mass production in Q4 2024), leaving Google roughly a year behind**.

The biggest differences today: ① **Google supports up to FP8**, emphasizing stability and large-scale cluster efficiency. ② **Nvidia prioritizes speed, introducing NVFP4 in Blackwell to double inference throughput vs. FP8**.

**Putting (a+b+c) together, hyperscalers are still lifting capex and AVGO’s share is rising**. Yet the stock has been muted, likely due to concerns about capex sustainability. **Meta guides 2026 capex of $115–135bn, over 50% of revenue, well above the prior 20–25% range**.

**Google and Microsoft are also pushing capex to 40%+ of revenue**. Meta’s revenue growth is ~15–20%, while 2026 capex/revenue hits 50–60%, suggesting limited room to increase further. That implies hyperscaler capex growth may not be sustainable at current levels.

**Hence, the market widely expects capex growth to slow sharply around 2027, ending the high-growth, multiple-expansion phase**. For AVGO in FY26, this is a period of earnings growth and valuation digestion, with the multiple now below 30x.

**Industry headwinds weigh especially on Nvidia**. AVGO faces clearer risks: while it is a cost-down option for cloud operators, Google may diversify to Taiwan vendors or in-house. **For example, Google’s next-gen TPUv8 is being co-developed by AVGO and MediaTek (MTK). If legacy clients do not add orders, the market worries about share shifting to Taiwan alternatives**.

**Order growth from existing clients is a key question**. Also, unlike Nvidia’s structurally rising margins, AVGO’s margin pressure from ASIC mix is another investor concern. **With a current mkt cap of ~$1.5tn, AVGO trades at ~27x PE on FY26 post-tax core operating profit** (assumes +74% YoY revenue, 72% operating GPM, 9.7% tax). AVGO’s valuation remains above Nvidia (~20x PE), reflecting ASIC share gains, even as sector multiples have corrected.

**On forward growth, management provided a 2027 AI outlook**. Across six core AI customers (Google, Anthropic, Meta, OpenAI, etc.), combined compute demand approaches 10GW, implying over $100bn in AI revenue.

**Explicit guidance should ease near-term worries and support sentiment**. More important will be management’s detail on Taiwan outsourcing vs. in-house and margin trajectory, the key overhangs on valuation.

Dolphin Research’s detailed take on AVGO’s results follows below:

**I. AVGO’s key businesses**

Recent growth has been driven by AI and the VMware consolidation, making custom AI ASICs and VMware pricing strategy the focal points. By segment:

**1) Semiconductor solutions**: Benefiting from AI revenue growth, mainly demand for custom ASICs from Google, Meta and ByteDance. Non-AI was largely flat. **AI**: Incremental growth mainly from Google TPU shipments. **AVGO now has six core AI customers (including Google, Anthropic, Meta, OpenAI, etc.), with OpenAI becoming a substantive customer**.

**For 2027, the six customers’ combined compute demand is near 10GW**, implying $100bn+ in AI revenue. Anthropic exceeds 3GW, and OpenAI will ramp its first XPU (>1GW).

**2) Infrastructure software**: With VMware consolidated, software is ~40% of revenue. AVGO raised VMware prices as it shifted from perpetual to subscription, which boosted revenue, but that impact is fading.

**II. Consolidated results: AI is the core driver**

**2.1 Revenue**

**AVGO delivered Q1 FY26 revenue of $19.3bn (+29.5% YoY), in line with the Street ($19.2bn)**. YoY growth was mainly AI-driven. **QoQ, total revenue rose $1.3bn**, with AI adding $1.9bn QoQ and software down sequentially.

**2.2 Gross profit**

**Gross profit was $13.2bn, +30% YoY**. Reported GPM was 68.1%, up slightly QoQ. **On an operating basis (ex amortization and restructuring), GPM was 75.8%, down 80bps QoQ**, due to the higher mix of lower-margin custom ASICs.

**2.3 Operating expenses**

**Opex was $4.6bn, down slightly QoQ**. Ex SBC, **core opex (R&D + S&M) was $2.04bn, down $90mn QoQ**. Post VMware consolidation, AVGO’s opex optimization is largely complete.

**2.4 Profit**

**Net income was $7.35bn in Q1 FY26**. Dolphin Research prefers core operating profit (= GP - R&D - S&M) as a cleaner view. **Core operating profit was $10.65bn, up $900mn QoQ, driven by AI**.

**2.5 EBITDA**

AVGO emphasizes Adj. EBITDA% given its M&A-heavy model. **Dolphin Research estimates Q1 FY26 Adj. EBITDA% at 68%, vs. prior guidance of 67%**. Leverage improved: **Total Debt/LTM Adj. EBITDA fell to 2**, back to pre-deal levels on AI-driven EBITDA growth. This suggests VMware’s impact was digested within two years, and AVGO may resume pursuing new deals.

**III. Segment detail: six customers could contribute $100bn in AI revenue**

AVGO’s two pillars are semiconductor solutions and infrastructure software. Within these: **1) Semiconductor solutions**: networking (AI), wireless, storage connectivity, broadband, industrial & other. **2) Infrastructure software**: VMware, CA, Symantec, Brocade, etc.

**3.1 Semiconductor solutions**

**Q1 FY26 semiconductor revenue was $12.5bn, +52% YoY**. Growth was mainly AI-driven, with non-AI stable.

**1) AI**

**AI is the core earnings driver**. AI revenue was $8.4bn, up $1.9bn QoQ, re-accelerating on Google TPU shipments. **AI revenue is currently concentrated in three customers (Google, Meta, ByteDance)**. With Google and Meta lifting capex, AVGO guides Q2 AI revenue of $10.7bn, up $2.3bn QoQ.

**AVGO’s ASIC roster now includes six disclosed customers: Google, Meta, ByteDance, Anthropic, a fifth customer (~$1bn), and newly OpenAI**. This indicates prior framework agreements are converting and OpenAI is now a substantive customer. Near term, focus remains on output from the three current customers, especially the ramp of TPUv6 and TPUv7. **Orders from Anthropic and the fifth customer (~$1bn) will ship in H2 2026, making full-year AI revenue back-half weighted**.

Addressing growth uncertainty, **management outlined a 2027 AI outlook: with six core customers (Google, Anthropic, Meta, OpenAI, etc.), combined compute demand is near 10GW, implying $100bn+ in AI revenue**. Anthropic tops 3GW, and OpenAI will mass-produce its first XPU (>1GW).

**The outlook should bolster near-term confidence**. That said, hyperscaler capex ratios are already elevated. Meta’s 2026 capex/revenue >50% limits further upside, which remains a key overhang for company and sector multiples.

**2) Non-AI**

**Non-AI semiconductor revenue was $4.1bn this quarter, roughly flat YoY**. The non-AI portfolio includes enterprise storage, broadband, wireless, and industrial & other. Enterprise networking, broadband and server storage grew YoY, offsetting seasonal weakness in wireless.

**3.2 Infrastructure software**

**Q1 FY26 infrastructure software revenue was $6.8bn, +1.4% YoY**. VMware integration impacts have been digested; focus shifts to organic growth.

Software comprises VMware plus legacy CA, Symantec and Brocade. The legacy stack runs at roughly $2.0bn per quarter, **so the key watch is VMware**. **Dolphin Research estimates VMware contributed about $4.6bn this quarter**. License-to-subscription migration is now above 85%. As subscription penetration rises, VMware and software revenue should still grow, but not at M&A-integration pace.

**With the leverage ratio down to 2, VMware has been absorbed**. AVGO is no longer breaking out VMware detail; AI is the primary focus.

<End here>

Prior AVGO coverage by Dolphin Research:

Earnings calls:

Dec 12, 2025 Trans: [博通 AVGO（纪要）：Anthropic 追加百亿，730 亿订单是下限](https://longportapp.cn/zh-CN/topics/37083330)

Dec 12, 2025 First Take: [博通：叫板英伟达，结果先锋自己先怂了？](https://longportapp.cn/zh-CN/topics/37081333)

Sep 5, 2025 Trans: [博通（纪要）：AI 收入增速在下个财年将超 60%](https://longportapp.cn/zh-CN/topics/33658831)

Sep 5, 2025 First Take: [英伟达、AMD 寡淡？博通霸气接棒 AI 扛旗手](https://longportapp.cn/zh-CN/topics/33654872)

Jun 6, 2025 Trans: [博通（纪要）：2026 年 AI 收入将延续 60% 的增速](https://longportapp.cn/zh-CN/topics/30421923)

Jun 6, 2025 First Take: [博通：ASIC 增速 “失灵”，万亿 ASIC 故事遇 “坑” or 迎 “机”？](https://longportapp.cn/zh-CN/topics/30413673)

Mar 7, 2025 Trans: [博通（纪要）：ASIC 客户加 2 变 “3+4”，暂不考虑并购](https://longportapp.cn/zh-CN/topics/27896151)

Mar 7, 2025 First Take: [Marvell 塌方、英伟达蛰伏？博通来当定海神针了](https://longportapp.cn/zh-CN/topics/27895695)

Risk disclosure and disclaimer: [海豚君免责声明及一般披露](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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## Comments (4)

- **流水滔滔不绝 · 2026-03-05T02:22:00.000Z · 👍 1**: Just switched from Broadcom to Ada a few days ago, don't mess with it
  - **Dolphin Research** (2026-03-05T03:23:39.000Z): Didn't wait to gamble on the earnings report? 😂
  - **塔勒布门徒** (2026-03-05T03:39:16.000Z): Change it back then
  - **流水滔滔不绝** (2026-03-05T03:44:02.000Z): I have no faith in Broadcom. I won't invest in unfamiliar companies anymore. The trend is too poor to hold with confidence. I prefer the top dog🥲