Broadcom’s second quarter results were well received by the market, as management highlighted strong demand for AI-related semiconductors and ongoing momentum in its infrastructure software segment. CEO Hock Tan attributed the 22% year-over-year revenue growth primarily to accelerated adoption of custom AI accelerators and robust bookings in both AI semiconductors and VMware. Tan noted, “Demand for custom AI accelerators from our three customers continued to grow as each of them journeys at their own pace towards compute self-sufficiency.” The company also saw improvement in operating margins, supported by product mix and disciplined cost controls.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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 Q2 Earnings Call

• Ross Seymore (Deutsche Bank) asked if the acceleration in AI revenue was solely due to the new customer or also stronger demand from existing clients. CEO Hock Tan said both factors contributed, with the fourth customer providing immediate and substantial demand.
• Harlan Sur (JPMorgan) questioned the outlook for non-AI semiconductor recovery and whether recent order trends pointed to a cyclical upturn. Tan replied that while bookings are up year-over-year, recovery is slow and uneven, with broadband showing the most promise.
• Vivek Arya (Bank of America) sought clarification on the AI revenue growth rate for next year and the evolving mix between custom and networking products. Tan indicated growth should accelerate further, with XPUs making up a larger share of AI revenue.
• Stacy Rasgon (Bernstein Research) probed the composition of Broadcom’s $110 billion backlog. Tan noted that at least half is semiconductors, and most of that is AI-related, though he declined to break down the specifics further.
• Carl Ackerman (BNP Paribas) asked about adoption rates for VMware Cloud Foundation among major enterprise clients. Tan responded that over 90% of top accounts have purchased licenses, but full deployment will take time and is a key focus for the next two years.

Catalysts in Upcoming Quarters

For the next several quarters, our analysts will focus on (1) the pace of new AI XPU customer onboarding and expansion; (2) the adoption and rollout of VMware Cloud Foundation across Broadcom’s enterprise base; and (3) signs of sustained recovery in non-AI semiconductor segments, particularly broadband and storage. Developments in networking technology and service attach rates will also be closely monitored as indicators of future performance.

Broadcom currently trades at $370.60, up from $305.92 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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