Broadcom Reports Strong Q1 Results Amid Software Growth Slowdown
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 05 2026
0mins
Should l Buy AVGO?
Source: stocktwits
- Software Segment Slowdown: Broadcom's infrastructure software segment reported a mere 1% revenue growth in Q1 2026, sharply down from 19.2% in Q4 2025 and 46.7% in Q1 2025, indicating diminishing returns from its major acquisition of VMware, which could impact future market competitiveness.
- Strong Overall Performance: The company achieved a 29% increase in total revenue for Q1, reaching $19.31 billion, surpassing estimates of $19.13 billion, while the Q2 revenue forecast of approximately $22 billion reflects robust performance in its AI semiconductor business and key customer partnerships.
- AI Demand Boosts Outlook: Despite the slowdown in the software segment, management anticipates a 9% increase in Q2 software sales to $7.2 billion, with the CEO asserting that the growth in AI will drive demand for VMware software, highlighting its critical role in modern data centers.
- Share Buyback Program: Broadcom announced a new $10 billion share repurchase program aimed at enhancing shareholder value, and although its stock has declined 8.3% year-to-date, shares rose 5.3% in after-market trading following the release of strong earnings.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 419.940
Low
370.00
Averages
457.75
High
525.00
Current: 419.940
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Broadcom AI Business Growth: Broadcom's AI-related revenue reached $8.4 billion last quarter, growing 106% year-over-year, with projections suggesting this business could exceed $100 billion by 2027, positioning it as a strong alternative to investing in Nvidia.
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- Optimistic Market Outlook: As AI technology becomes more prevalent, the demand for memory and custom AI chips will continue to rise, with companies like Micron and Broadcom poised to benefit, driving their stock prices up and attracting more investor interest.
See More
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- Attractive Stock Valuation: Despite a recent uptick in Amazon's stock price, its valuation based on operating cash flow suggests it remains at the lower end of its typical range, making it a smart time for investors to buy, particularly as the company continues to invest in new capabilities.
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- Deviation in Asset Allocation: For instance, a portfolio initially set at 70% stocks and 30% bonds in early 2022 may have shifted to 80% stocks and 20% bonds due to market fluctuations, significantly raising risk levels and underscoring the need for regular reviews.
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- Broadcom AI Chip Growth: Broadcom's ASIC chips for AI applications saw a remarkable 106% year-over-year revenue increase to $8.4 billion last quarter, with projections suggesting this business could exceed $100 billion by 2027, indicating strong potential in the AI market.
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See More
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- Increased Market Competition: Amazon's shareholder letter highlights that its AWS Trainium chips offer better cost-performance compared to Nvidia's GPUs, indicating Amazon's potential in the AI computing space and posing a threat to Nvidia's market share.
- Customer Shift Trend: With 98% of its large clients now using Amazon's Graviton CPUs, CEO Andy Jassy believes that Trainium chips will achieve similar market penetration, intensifying competitive pressure on Nvidia.
- Significant AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, with this figure rising to 66% in Q3, underscoring the critical role of cloud computing in the company's overall profitability.
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