Broadcom’s first quarter results for 2026 exceeded Wall Street’s expectations for both revenue and profit, yet shares fell sharply as investors digested underlying trends. Management credited surging demand for AI semiconductors as the core driver of year-on-year growth, with CEO Hock E. Tan emphasizing that “AI semiconductor revenue reached a record $10.8 billion, up 143% year on year.” Margins benefited from scale and operating leverage, but the company noted that product mix shifts—particularly the growing share of lower-margin AI chips—tempered gross margin performance. Outgoing CFO Kirsten Spears highlighted that, despite robust operating performance, “gross margin was down 32 basis points year on year as semiconductor became a larger proportion of our product mix.”

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While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Broadcom’s Q1 Earnings Call

• Harlan Sur (JPMorgan): Asked about the magnitude and timing of AI backlog and whether second-half demand would support a $200 billion backlog. CEO Hock Tan explained the backlog trajectory and reiterated expectations for continued strong growth into 2027.

• Blayne Curtis (Jefferies): Sought clarity on the structure and upside of the Google agreement. Tan described it as a “very substantial” multi-year commitment, noting Broadcom expects some diversification by Google but remains a primary supplier.

• Ross Seymore (Deutsche Bank): Questioned the drivers behind falling gross margins despite strong software sales. CFO Kirsten Spears clarified that the shift toward lower-margin AI chips is causing margin compression, partially offset by networking and software segments.

• Timothy Arcuri (UBS): Inquired about Broadcom’s ability to secure incremental wafer and HBM memory supply to meet customer demand. Tan emphasized confidence in current supply arrangements and flexibility to add foundry partners if needed.

• Stacy Rasgon (Bernstein Research): Asked whether gigawatt shipment targets for 2027 had changed and if demand would remain back-half loaded. Tan confirmed shipment plans are intact and the trajectory into 2028 is expected to be even steeper.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace at which Broadcom ramps AI semiconductor shipments to fulfill large customer contracts, (2) the company’s ability to maintain or improve operating margins amid product mix changes, and (3) the ongoing adoption of VMware Cloud Foundation and related software offerings. Expansion of supply chain capacity and execution on long-term agreements will also be key signposts.

Broadcom currently trades at $388.91, down from $479.23 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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