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Call sheet · Q1'26

Broadcom (AVGO)

Q1'26 earnings call · held March 4, 2026 · compared with the Q4'25 call · management-credibility review
9/12
Disclosure score
1 high, 3 medium, 2 low flags
Financial quality
Bottom line
The sleeper story is AI networking scaling to 40% of AI revenue with unique technology moats in Tomahawk 6 switches and 200G SerDes that competitors can't match. Everyone's focused on the obvious $100B+ 2027 XPU story, but the networking component is growing faster and has clearer competitive differentiation. The binding constraint isn't demand or supply chain - they've locked up capacity through 2028 - it's execution risk on ramping 6 customers simultaneously while maintaining technology leadership. Most revealing quote: Hock dismissing margin concerns as 'hallucinating' after Kirsten warned about system sales pressure last quarter. My view changes if gross margins decline below 75% in the next two quarters or if they continue dropping key working capital metrics like DSO without explanation.

The 30-second version

  • AI networking is the sleeper star - scaling from 33% to 40% of AI revenue with unique tech moat
  • XPU backlog exploded to $100+ billion 2027 visibility with supply chain locked through 2028
  • Gross margin guidance suspiciously vague after rack revenue concerns last quarter

What changed this quarter

MetricQ4'25Q1'26Change
Total Revenue$18.0B (+28% YoY)$19.3B (+29% YoY)Acceleration to 29% YoY vs 28%
AI Semiconductor Revenue$6.5B (+74% YoY)$8.4B (+106% YoY)+3,200 bps acceleration
Total Semiconductor Revenue$11.1B (+35% YoY)$12.5B (+52% YoY)+1,700 bps acceleration
Infrastructure Software Revenue$6.9B (+19% YoY)$6.8B (+1% YoY)Decelerated 1,800 bps
Adjusted EBITDA$12.12B (68% margin)$13.1B (68% margin)Dollar growth, margin flat
Free Cash Flow$7.5B (41% of revenue)$8.0B (41% of revenue)Consistent conversion rate
AI Networking % of AI Revenue33%33%Q2 guidance: 40% mix
Non-AI Semiconductor Revenue$4.6B (+2% YoY)$4.1B (flat YoY)Softened 200 bps
Inventory$2.3B (58 days)$3.0B (68 days)+10 days inventory build
Days Sales Outstanding36 daysNot disclosedMetric disappeared

Accountability tracked

8 new promises made4 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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