Broadcom Inc. (AVGO)

Broadcom's newest filed quarter, the three months to 2 August 2026, brought revenue of $29.6 billion, up 86 percent from a year earlier 2. Revenue from AI chips alone was $16.7 billion, up 221 percent, carried by custom AI accelerators and AI networking 21. Net income was $13.1 billion, against $4.1 billion a year before 2.

The demand has changed how Broadcom sells: AI labs often lack the cash to buy racks of chips outright, so Broadcom arranges for lenders to buy them and lease them out 1. In June it launched the AI XPV platform with Apollo and Blackstone, opening with a $35 billion tranche for more than 1 gigawatt of computing for Anthropic 12. Where needed, Broadcom guarantees part of the leases, a promise called a backstop 1.

The first backstop was capped at about $29 billion once all its racks are deployed 1. On 26 October 2026 Broadcom agreed a further one, capped at about $43 billion 3. If the customer defaults, Broadcom pays the gap between 72.5 percent of what is owed on the lease and what the racks sell for 3.

Broadcom calls the backstop a contingent liability with a low probability of occurring, so the open question is whether its AI customers keep paying 3. Meanwhile it guided revenue of about $34.8 billion for the quarter to 1 November 2026 2.

Broadcom's roots run back to Hewlett-Packard, AT&T, LSI and Broadcom Corporation, the chip maker it bought in 2016 and whose name it took 86. It moved its legal home from Singapore to the United States on 4 April 2018 8.

A few weeks earlier, on 12 March 2018, a presidential order blocked its bid for the phone chip maker Qualcomm, citing a threat to national security 9. Broadcom turned to software instead and bought CA, Inc., a maker of mainframe and business software, on 5 November 2018 for $18.8 billion in cash 7.

In fiscal 2019 revenue rose to $22.6 billion from $20.8 billion, mainly because of CA 8. Chip revenue fell 8 percent on weaker demand for its wireless parts in phones, while software revenue rose 190 percent 8.

On 4 November 2019 Broadcom bought the enterprise security business of Symantec for about $10.7 billion 8. Revenue reached $23.9 billion in fiscal 2020 and $27.45 billion in fiscal 2021 7. The 2021 rise of 15 percent came mostly from wireless chips, after a major customer's new phone had ramped late the year before 7.

Revenue was $33.2 billion in fiscal 2022 and $35.8 billion in fiscal 2023, up 8 percent on networking, server storage and broadband chips 6. Sales to Apple came to about 20 percent of revenue in each of those two years 6.

The biggest turn came on 22 November 2023, when Broadcom bought VMware, the maker of private cloud software 4. VMware's holders received about $30.8 billion in cash and 544 million Broadcom shares 4. In fiscal 2024 revenue jumped 44 percent to $51.6 billion, and software revenue rose 181 percent on VMware's contribution 5.

Broadcom then cut costs and sold pieces: VMware's end-user computing business went to KKR for $3.5 billion on 1 July 2024 4. The workforce fell from about 37,000 to about 33,000 people over the following fiscal year 54.

Fiscal 2025 revenue rose 24 percent to $63.9 billion 4. Chips grew on demand for custom AI accelerators and AI networking, and software on VMware Cloud Foundation sold as subscriptions 4. Gross margin, the share of revenue left after production costs, rose to 68 percent from 63 percent 4.

In the first nine months of fiscal 2026 revenue reached $71.1 billion, up 55 percent, and chips grew to 68 percent of the total 1. The AI share kept rising each quarter: AI chip revenue was $8.4 billion in the first quarter and $10.8 billion in the second 2223.

Custom AI accelerators

Broadcom designs custom chips, called XPUs, to each customer's own specification, for training and running AI models 4. Google is one such customer: in April 2026 the two signed a long-term agreement for Broadcom to develop and supply future generations of Google's Tensor Processing Units 10. OpenAI and Broadcom announced a plan for 10 gigawatts of accelerators that OpenAI designs, deployed from the second half of 2026 to the end of 2029 13.

The April filing says Anthropic, beginning in 2027, will reach about 3.5 gigawatts of TPU-based computing through Broadcom, depending on its continued commercial success 10. In July Broadcom and Apple agreed to extend their collaboration through 2031, with Broadcom supplying custom chips for several generations of Apple products 11. The Next Web, citing Reuters, notes that technology companies use Broadcom's custom chips to depend less on Nvidia 18.

These orders sit in a backlog: firm commitments not yet booked as revenue stood at about $179.2 billion on 2 August 2026, including a long-term contract for custom AI accelerators 1. Broadcom expects to book about 25 percent of that amount within twelve months 1.

AI networking

The second AI line is Ethernet switching, the chips that move data between thousands of processors in an AI data center 4. Tomahawk 6, which The Register reported shipping in June 2025, handles 102.4 terabits a second and up to 512 ports at 200 gigabits each 14. The Register cast it as Broadcom's answer to Nvidia's switches, in a field where Ethernet has trailed Nvidia's InfiniBand 14.

AI revenue, accelerators and networking together, was $16.7 billion in the third quarter, about 56 percent of all revenue (computed) 2. The chip segment brought in $20.8 billion that quarter, up 127 percent, with an operating margin of about 61 percent (computed) 1.

Other chips

Outside AI, Broadcom sells radio-frequency filters and Wi-Fi and Bluetooth chips for phones, chips for set-top boxes and broadband gateways, storage controllers and industrial parts 4. Its filters use its own FBAR technology, made in its own factories 4. The filings count these lines in the same segment as the AI chips, without a separate figure 4.

They grow more slowly: in fiscal 2024 demand for broadband and server storage chips fell even as AI networking rose 5.

VMware and infrastructure software

The software segment brought in $8.8 billion in the third quarter, up 29 percent, with an operating margin of about 84 percent (computed) 1. Its main product is VMware Cloud Foundation, which lets a company run its own data centers as a private cloud 4. Growth came from it and from licences on contracts customers cannot cancel, and most new software contracts no longer allow cancellation for convenience 1.

The segment also carries mainframe software from CA, the Symantec and Carbon Black security products, and fibre channel storage networking 4. Most of the Fortune 500 rely on this software, the annual report says 4.

Plants and people

Broadcom outsources most of its manufacturing, chiefly to TSMC, and keeps its own factories for FBAR filters and lasers, mostly in the United States and Singapore 4. Its main warehouse is in Malaysia, and its Palo Alto headquarters stands on land leased from Stanford University until 2046 4.

Hock Tan has run the company since March 2006, and Henry Samueli, long the chairman of Broadcom Corporation, chairs the board 419. Amie Thuener, formerly chief accounting officer of Alphabet, became chief financial officer on 12 June 2026, succeeding the retiring Kirsten Spears 20. Broadcom had about 33,000 employees at the end of fiscal 2025, 57 percent of them in research and development 4.

Rivals

The annual report names no rivals, describing them as chip makers, fabless designers and the in-house chip teams of large customers 4. In AI networking the main rival is Nvidia, whose InfiniBand and Spectrum-X switches compete with Broadcom's Ethernet, The Register reported 14. In software, Broadcom says it helps European VMware partners offer alternatives to the big public clouds, Reuters reported 15.

Problems

Broadcom's buyers are few: one distributor took 50 percent of revenue in the third quarter, and the top five end customers about 50 percent over nine months 1. Shipments to China, including Hong Kong, made up 17 percent of revenue in fiscal 2025, though the filing says the end customers are often elsewhere 4.

European cloud providers say VMware's price rises, bundles and minimum commitments have raised their costs by more than 1,000 percent 16. Their group, CISPE, filed an antitrust complaint with the European Commission on 19 March 2026, asking it to stop Broadcom ending its VMware partner program in Europe 1615. Broadcom called CISPE "an organisation funded by hyperscalers", and the Commission said it was assessing the complaint, Reuters reported 15.

The AI leases add a new risk: if a customer defaults, Broadcom can be left with racks whose resale may not cover its guarantee 13. Broadcom also says selling AI racks will likely compress its gross margin 1.

The umbrella, in words

Broadcom Inc. is a Delaware company, and its annual report lists ten significant subsidiaries, among them Broadcom Corporation, CA, Inc., VMware LLC and Avago Technologies International Sales in Singapore 244. Its parts came by purchase: LSI, Broadcom Corporation, Brocade, CA, Symantec's enterprise security business, VMware, and in April 2024 Seagate's system-on-chip operations for $600 million 4.

Broadcom owns about 3.8 million square feet of large facilities, about 2.9 million of them in the United States 4. In Malaysia it holds land on leases from the state running to 2051 and 2077 4.

No single owner controls it: on 24 February 2026 Vanguard held 9.9 percent and BlackRock 7.3 percent, as reported in their Schedule 13G filings 19. Henry Samueli held 1.8 percent, and all 13 directors and officers together 1.9 percent 19.

Broadcom has also agreed that its AI customer may, if needed, issue it convertible notes of up to $42 billion tied to the leases; none had been issued by 2 August 2026 1.

For the quarter to 1 November 2026, Broadcom guided revenue of about $34.8 billion, up 93 percent, and an adjusted operating margin of about 66 percent 2. Tan said he expects AI chip revenue of $21.7 billion in that quarter, up 236 percent 2.

The AI XPV platform is meant to fund more than 20 gigawatts of computing for frontier AI labs, Anthropic and OpenAI among them, through 2028 121. Bloomberg reported in August that Broadcom was in talks to raise more than $60 billion of further debt for AI chips, possibly up to $100 billion, The Next Web wrote 18.

OpenAI's racks are set to deploy from the second half of 2026 to the end of 2029, the two companies said 13. Anthropic's 3.5 gigawatts through Google are due to start in 2027, Broadcom's filing says 10.

Under a separate supply assurance agreement, Broadcom is to supply networking and other components for Google's next-generation AI racks through up to 2031 10. The Apple agreements cover custom chips for multiple generations of Apple products, also through 2031 11. In the April filing the parties said they were in discussions with operational and financial partners for Anthropic's deployment 10.

Samsung said in July that it agreed with Broadcom to widen work on memory, contract chip making and advanced packaging, envisaged to exceed $200 billion until 2030 17. Broadcom's next communications chips are to be made on Samsung's sub-2-nanometre process, Samsung said 17. The agreement is a memorandum of understanding, Reuters reported 17.

Broadcom has two buyback programs of $11 billion and $10 billion, both running to 31 December 2026 1. The board declared a quarterly dividend of $0.65 per share, paid on 30 September 2026 2.

Tan's 2025 award pays its target only if AI revenue reaches $90 billion in four straight quarters within fiscal 2028 to 2030 21. It vests at the end of fiscal 2030 21. Spears stays on as a consultant until 15 March 2027 20.

How it operates

Broadcom sells two very different things. The larger is chips and chip-based hardware for five end markets: networking, wireless devices, servers and storage, broadband and industrial. For AI data centers it makes custom accelerators called XPUs, each built to one customer's specifications, along with Ethernet switching and routing chips, network adapters, physical-layer and optical parts and, in some cases, whole racks. It also makes radio filters for phones on its own FBAR technology, Wi-Fi and Bluetooth chips, PCIe switches, storage controllers, hard-disk chips, set-top box and broadband chips, and industrial parts. 18192021

The other half is infrastructure software in five portfolios: private cloud, led by VMware Cloud Foundation (VCF); mainframe software; cybersecurity, including Symantec and Carbon Black; enterprise software; and management of fibre channel storage networks. Its software buyers are large enterprises, most of the Fortune 500 among them, and banks, insurers and government agencies. 22232425

Sales are concentrated. One distributor bought 32% of fiscal 2025 revenue directly, up from 28%; distributors in all took 48%; and the company believes its top five end customers, through all channels, account for about 40%. Its AI chips go to hyperscalers and companies building frontier AI models, and to the equipment makers and system integrators that build their servers, switches and racks. Most product revenue is booked when title passes in Penang, Malaysia, where it keeps most of its inventory. 2627282930

By shipment location, the United States brought in 16.5 billion dollars, 25.8% of fiscal 2025 revenue, up 28.1%; China including Hong Kong 11.2 billion, 17.5%; Singapore 10.8 billion, 16.9%; Taiwan 6.5 billion, 10.1%; and all other places 19.0 billion, 29.7%. The filing notes that the end customers behind shipments to China are often located elsewhere. 3132

It outsources most manufacturing. TSMC makes most of its wafers, and TSMC, ASE, Foxconn, Amkor and SPIL do most of its assembly and test. It keeps its own fabs for proprietary processes, the FBAR filters and the gallium arsenide and indium phosphide lasers used in fiber optics, mostly in the United States and Singapore. About two-thirds of its manufacturing materials came from five suppliers in fiscal 2025, some of them single sources. 33343536

The specifics

Broadcom traces its roots to AT&T/Bell Labs, Lucent and Hewlett-Packard and was built by acquisition: LSI, Broadcom Corporation, Brocade, CA, Symantec's enterprise security business and VMware. It bought VMware on November 22, 2023 for about $30,788 million in cash and 544 million of its shares, sold VMware's end-user computing business to KKR for $3.5 billion on July 1, 2024, and in April 2024 bought Seagate's system-on-chip operations for $600 million. 37383940

It holds about 19,000 patents with 2,170 applications pending, and part of its revenue comes from licensing royalties and litigation settlements. It names no rivals, describing its chip competitors as integrated device manufacturers, fabless companies and the in-house teams of large equipment makers, and warning that some of its own customers are entering its markets; in software it faces large enterprise vendors and niche players. 41424344

It has begun selling and leasing whole AI racks and systems built on its XPUs, and says its top AI customers have pressed for leases instead of purchases, with alternative financing or deferred payment, while some customers that chose it have constrained capital yet need its chips immediately. 454647

Tax incentives in Singapore, running through November 2030, and a Malaysian tax holiday to 2028 cut its fiscal 2025 tax provision by about $2,709 million, against a Singapore rate that would otherwise be 17%. It is subject to US export rules such as the Export Administration Regulations. 484950

What drives growth, line by line

Semiconductor Solutions. 36.9 billion dollars, 57.7% of fiscal 2025 revenue, up 22.5%. The filing credits strong demand for its networking solutions, primarily custom AI accelerators and AI networking products. 3151

Infrastructure Software. 27.0 billion dollars, 42.3% of revenue, up 25.8%. The filing credits strong demand for VCF, including license revenue on contracts customers cannot terminate, and the move to subscription licenses; upfront license revenue came to $7,800 million. 315152

Across the company, revenue rose 23.9% to 63.9 billion dollars and gross margin widened to 68% from 63%, which the filing ties to higher revenue, more software license revenue and lower software labor costs after the VMware integration. Operating income rose 89.3% to 25.5 billion dollars. Operations generated $27,537 million of cash, and it paid $11,142 million in dividends. 535455

What comes next, in the company's own words: it expects a material impact on results and cash flows in fiscal 2026 from the global minimum tax as Singapore's version takes effect, expects significant customer concentration to continue, and plans to keep investing in product development, both organically and through acquisitions. 565758

The read's section on the people who run it is on the People tab.

What the desk infers Inferred

1. Inferred

   Some of Broadcom's newer AI chip customers lack the balance sheets of the largest cloud companies, most likely developers of frontier AI models, which is why it has begun offering to lease whole XPU racks with financing.

   Because

   • The filing names its AI customers as hyperscalers and companies with AI frontier models. 28
   • Its top AI customers have sought to lease racks built on its XPUs instead of buying them, with alternative financing or deferred payment. 46
   • Some customers that selected it have constrained resources or capital but need its custom XPUs immediately. 47
   • It lists the sale or leasing of AI racks and systems among its new business models. 45
   Confidence 60 of 100Wrong if A filing showing that the customers leasing or financing XPU racks are the large cloud providers themselves.
2. Inferred

   The distributor that bought 32% of revenue is mainly a channel for Broadcom's AI and networking chips on their way to a few large end customers, not a broad reseller of its catalog.

   Because

   • Direct sales to that one distributor were 32% of fiscal 2025 revenue, up from 28%. 26
   • Total revenue rose 23.9%, so the distributor took a larger share of a larger total. 5326
   • The filing credits the chip segment's growth to custom AI accelerators and AI networking products. 51
   • Its top five end customers, through all channels, account for about 40% of revenue, and its custom accelerators are built to individual customers' specifications. 2720
   Confidence 55 of 100Wrong if A filing showing that most of what passes through that distributor is standard catalog parts sold to many smaller customers.
3. Inferred

   Software growth came mainly from moving existing VMware customers onto VCF subscriptions, with much of the revenue booked upfront, rather than from winning new customers.

   Because

   • The filing credits software growth to VCF demand, license revenue on contracts customers cannot terminate and the move to subscription licenses. 51
   • It booked $7,800 million of upfront license revenue within products revenue in fiscal 2025. 52
   • Its stated focus is deeper penetration of its existing core, mainframe, VMware and Symantec endpoint customers. 59
   • Software gross margin rose on more license revenue and lower labor costs after the VMware integration. 54
   Confidence 65 of 100Wrong if A filing showing that most of the software segment's growth came from customers new to VMware products.

Past

Revenue grew from $18 billion in fiscal 2017 to $64 billion in fiscal 2025, up 17.4% a year; it rose in 8 of 8 years; net income was positive in 9 of 9 years. Over the three fiscal years to 2025, the diluted share count grew about 4.7% a year, and dividends and buybacks returned about 67% of operating cash flow. A 10-for-1 split took effect on July 12, 2024. In the year to September 30, 2026, officers and directors filed 281 sales and 2 purchases of their own stock. 12

Present

For the fiscal year ended November 2, 2025, Broadcom reported revenue of $64 billion and profit of $23 billion. In that year, the company earned about 28 cents of profit for every dollar of shareholders' money; its products earned about 25 cents per dollar of everything the company owns; it owed about 52 cents per dollar of assets; and its share count grew 1.6% over the year. By revenue of $64 billion, the company ranks in the top 3% of its industry family by size; its net margin of 36.2% ranks in the top 7%; and revenue growth of 24.3% a year over the last three filed years ranks in the top 18%. 31

The chief executive is Hock E. Tan, President and CEO, filing under that title since April 18, 2018, 8.5 years; the 13 officers and directors filing in the last fifteen months have been on the record a median of 8.4 years; 4 officer or director changes were reported on Form 8-K since October 21, 2023, against the 13 people in charge now. 1

Future

The filing says the company expects a material impact on results and cash flows in fiscal 2026 from the global minimum tax as Singapore's version takes effect, expects significant customer concentration to continue, and plans to keep investing in product development, both organically and through acquisitions. 5

Cash of $16 billion against debt of $62 billion leaves negative 26.8% of assets as net cash, in the bottom 8% of its family; cash from operations less capital spending is 42.1% of revenue, in the top 5%; a gross margin of 67.8% ranks in the top 10%; research spending of 17.2% of revenue ranks in the bottom 43%. Revenue grew 24.3% a year over the last three filed years against 17.4% over all nine, speeding up; research spending grew 30.6% a year; capital spending grew 13.6% a year. 1

How the company operates From the company read

Broadcom sells two very different things. The larger is chips and chip-based hardware for five end markets: networking, wireless devices, servers and storage, broadband and industrial. For AI data centers it makes custom accelerators called XPUs, each built to one customer's specifications, along with Ethernet switching and routing chips, network adapters, physical-layer and optical parts and, in some cases, whole racks. It also makes radio filters for phones on its own FBAR technology, Wi-Fi and Bluetooth chips, PCIe switches, storage controllers, hard-disk chips, set-top box and broadband chips, and industrial parts. 78910

The other half is infrastructure software in five portfolios: private cloud, led by VMware Cloud Foundation (VCF); mainframe software; cybersecurity, including Symantec and Carbon Black; enterprise software; and management of fibre channel storage networks. Its software buyers are large enterprises, most of the Fortune 500 among them, and banks, insurers and government agencies. 11121314

Sales are concentrated. One distributor bought 32% of fiscal 2025 revenue directly, up from 28%; distributors in all took 48%; and the company believes its top five end customers, through all channels, account for about 40%. Its AI chips go to hyperscalers and companies building frontier AI models, and to the equipment makers and system integrators that build their servers, switches and racks. Most product revenue is booked when title passes in Penang, Malaysia, where it keeps most of its inventory. 1516171819

By shipment location, the United States brought in 16.5 billion dollars, 25.8% of fiscal 2025 revenue, up 28.1%; China including Hong Kong 11.2 billion, 17.5%; Singapore 10.8 billion, 16.9%; Taiwan 6.5 billion, 10.1%; and all other places 19.0 billion, 29.7%. The filing notes that the end customers behind shipments to China are often located elsewhere. 2021

It outsources most manufacturing. TSMC makes most of its wafers, and TSMC, ASE, Foxconn, Amkor and SPIL do most of its assembly and test. It keeps its own fabs for proprietary processes, the FBAR filters and the gallium arsenide and indium phosphide lasers used in fiber optics, mostly in the United States and Singapore. About two-thirds of its manufacturing materials came from five suppliers in fiscal 2025, some of them single sources. 22232425

New moves

On September 18, 2026, a shelf offering registration took effect, and a 424B3 shelf offering document was filed covering resale of registered securities. On September 10, 2026, the company filed a quarterly report for the period ended August 2, 2026, and an S-4 merger or exchange registration. On September 2, 2026, the company filed results released and reported another event. 4

On October 18, 2026, CoinDesk reported the SEC tokenized stock framework faces issuer pushback as Broadcom objects to an OKX-ICE listing. On October 13, 2026, the Guardian and MarketWatch reported Broadcom's CEO likened AI investing to a casino, creating reaction in the market. On October 12, 2026, CNBC reported Intel and Broadcom CEOs warned a capital crunch could become AI's biggest bottleneck. On October 10, 2026, MarketWatch reported Nvidia's stock was dodging an AI credit scare that was crushing Broadcom and Oracle. 6