Broadcom's Q1 FY2026 Earnings Preview

Publication Date: February 24, 2026

Author: Fabien Yip, Market Analyst

Overview

Broadcom is set to report its first-quarter fiscal year 2026 results on March 4, 2026, after market close. Investors are keenly watching the company's performance, particularly in the context of its AI semiconductor business and the anticipated margin pressures.

Recent Performance Highlights

In the fourth quarter of fiscal year 2025, Broadcom achieved record revenues of $18.0 billion, marking a 28% year-over-year increase, surpassing analyst expectations. The company reported non-GAAP diluted earnings per share (EPS) of $1.95, exceeding the consensus estimate of $1.86. For the full fiscal year, revenue grew 24% to $64 billion, driven by strong performances in AI semiconductors and the VMware acquisition.

AI semiconductor revenue surged by 74% year-over-year to $6.5 billion in Q4, contributing significantly to the overall revenue growth. The company secured substantial orders from major hyperscale customers, including a notable $11 billion order from Anthropic.

Q1 FY2026 Expectations

Analysts expect Broadcom to report total revenue of $19.1 billion for Q1 FY2026, reflecting a 28.1% year-over-year increase. However, profitability is projected to face challenges due to a higher mix of lower-margin AI solutions. The anticipated non-GAAP diluted EPS is $2.02, a 26.2% increase from the previous year.

Key Areas of Focus for Investors

• AI Revenue Delivery: Investors will be looking for confirmation of the company's guidance for Q1 AI semiconductor revenue of $8.2 billion, which represents a near doubling year-over-year.
• Gross Margin Trajectory: A forecasted decline in gross margin by approximately 100 basis points is a central concern, as the shift towards AI solutions may dilute overall margins.
• Customer Concentration: Broadcom's revenue is heavily concentrated among a few hyperscale customers, raising concerns about revenue risk if any customer slows down their deployment.
• VMware Integration: The performance of the infrastructure software segment, particularly VMware, will be scrutinized for its ability to sustain growth and profitability amidst potential market pressures.

Analyst Sentiment and Share Price Outlook

Despite the challenges, Wall Street analysts maintain a positive outlook on Broadcom, with an average 12-month target price of $452, indicating a potential upside of approximately 37% from current levels. The stock has recently retreated from its December peak but is approaching a critical support level around $320.

A positive earnings surprise could lead to a breakout, while disappointing results may push the stock below immediate support levels.

Conclusion

As Broadcom prepares to announce its Q1 FY2026 results, the focus will be on its ability to navigate margin pressures while capitalizing on the booming AI semiconductor market. Investors will be closely monitoring the earnings call for insights into revenue delivery, margin management, and customer diversification strategies.