Broadcom Inc. (NASDAQ: AVGO) delivered a blockbuster first quarter, sending shares up nearly 5% in after-hours trading on March 4, 2026. The semiconductor and infrastructure software giant crushed expectations on virtually every meaningful metric, powered by an AI semiconductor business that is growing at a staggering pace.
Table of Contents
The question now is whether the euphoria will hold when the market opens on March 5, or whether AVGO will follow a pattern that has become all too familiar with AI-related stocks this earnings season.
A Quarter That Was Hard to Argue With
Broadcom reported first-quarter fiscal year 2026 revenue of $19.31 billion, a 29% increase from the $14.92 billion the company posted in the same quarter a year ago. Net income on a GAAP basis came in at $7.35 billion, or $1.50 per diluted share, representing a 34% year-over-year improvement. On a non-GAAP basis, the measure most closely watched by Wall Street, Broadcom earned $2.05 per diluted share, up 28% from the prior year period.
Adjusted EBITDA came in at $13.13 billion, or 68% of revenue, up 30% from a year ago. Free cash flow was $8.01 billion, representing 41% of revenue. For a company of Broadcom’s scale, these numbers are a statement about operational discipline. CEO Hock Tan and CFO Kirsten Spears have built a machine that converts revenue into cash at a rate that stands out among technology companies.
The AI Engine Is Just Getting Started
The headline number buried inside the quarter was AI semiconductor revenue of $8.4 billion. That was up 106% year-over-year (YoY) and came in above the company’s own forecast. That’s not a rounding error. It’s a doubling of AI revenue in a single year, driven by robust demand for custom AI accelerators and AI networking products.
Broadcom’s semiconductor solutions segment, which includes its AI chip business, generated $12.52 billion in revenue during the quarter, up 52% year-over-year. Infrastructure software, which includes the VMware business Broadcom acquired in 2023, contributed $6.80 billion, up just 1% from the prior year. The story here is unmistakably about semiconductors — and specifically about AI.
What makes this particularly compelling for long-term investors is where management says things are heading. Hock Tan guided for AI semiconductor revenue of $10.7 billion in the second quarter alone. If that comes to pass, Broadcom’s AI business will have grown from a meaningful contributor to an absolute cornerstone of the company’s identity in the span of just a few quarters.
Guidance That Demands Attention
Second quarter revenue guidance of approximately $22.0 billion would represent 47% growth year-over-year — a significant acceleration from the 29% the company just reported. Adjusted EBITDA margins are expected to remain at 68% of projected revenue, suggesting that Broadcom is not buying growth by sacrificing profitability. This is the kind of guidance that tends to make analysts reassess their price targets for a company.
The company also announced a new $10 billion share repurchase program authorized through December 31, 2026, and reaffirmed its quarterly dividend of $0.65 per share, payable March 31, 2026. During the first quarter, Broadcom returned $10.9 billion to shareholders through $3.1 billion in cash dividends and $7.8 billion in stock repurchases. A company generating $8 billion in free cash flow per quarter and returning nearly $11 billion to shareholders in the same period is not just a growth story — it is increasingly a capital return story as well.
Can the After-Hours Pop Hold?
This is where the picture gets more complicated. Looking at the chart, AVGO shares closed Wednesday at $317.53, already sitting well below the 50-day simple moving average of $334.69. The stock has been in a downtrend since peaking near $400 late last year, and the RSI of 41.82 suggests the stock has been in oversold territory, but has not yet found a decisive floor.
The after-hours pop to roughly $332 puts the stock right back at that 50-day moving average. That’s exactly the kind of technical resistance level that can turn a gap-up open into a “sell the news” reversal. We’ve seen this movie before. The reaction to NVIDIA Corp. (NASDAQ: NVDA) earnings has been instructive. That is enormous beats, euphoric after-hours moves fueled by high-speed algorithmic trading programs. But in the case of NVDA stock, those gains disappeared once the regular trading session began.
It is not hard to construct the bear case for the next 24 hours. Broadcom is not cheap on any traditional valuation metric. The VMware integration, while proceeding well, still leaves infrastructure software growth at just 1%. That’s a reminder that not all parts of this business are firing equally. And the broader market tape, with tariff uncertainty and macro headwinds weighing on sentiment, is not exactly a tailwind for high-multiple tech names.
Still, the bulls have plenty of ammunition. A 47% revenue growth guide is not something the market ignores. If institutional buyers decide this quarter represents a re-rating event. That is, a moment where the consensus AI revenue trajectory gets revised meaningfully higher. In that scenario, AVGO stock could sustain and extend its gains through the regular session and beyond.
The Long-Term Case Remains Intact
Whether AVGO holds its gains on Thursday or gives some back, the long-term investment thesis around Broadcom deserves to be taken seriously. The company sits at an increasingly critical intersection of custom silicon and AI infrastructure, designing the kinds of chips that hyperscalers need to run their AI workloads at scale. Memory and high-bandwidth interconnects — areas where Broadcom’s networking expertise is particularly relevant — are going to be essential bottlenecks in AI infrastructure for years to come.
At $317 before earnings, the market was pricing in considerable skepticism. The results announced tonight suggest that skepticism may have been overdone. Whether you are a momentum trader watching that 50-day moving average or a long-term investor building a position around the AI infrastructure thesis, Broadcom just gave you a lot to work with.
The quarter was about as clean as they come. The story is getting bigger, not smaller. How the stock trades tomorrow will say more about the market’s mood than about Broadcom’s business.
Leave a Reply