Key Highlights

  • Broadcom reported Adjusted EBITDA of $15.244 billion in Q2 FY2026, representing 69% of Revenue — up from 67% in Q2 FY2025.
  • Q3 FY2026 Adjusted EBITDA guidance is approximately 68% of projected revenue of $29.4 billion, implying approximately $20 billion in a single quarter.
  • Non-GAAP Operating Income of $14.928 billion in Q2 represented 67% of revenue, stable with Q3 non-GAAP Margin/">Operating Margin guidance of approximately 67%.
  • Adjusted EBITDA grew 52% year-over-year in Q2, ahead of revenue growth of 48%, demonstrating positive Operating Leverage.
  • For H1 FY2026, cumulative Adjusted EBITDA was $28.372 billion, up from $20.084 billion in H1 FY2025.

It is a peculiarity of modern financial markets that investors spend considerable energy debating whether a Business can sustain 30% operating margins without asking whether the business generating 69% EBITDA margins is genuinely as efficient as it appears. Broadcom Inc. (Nasdaq: AVGO) sits in an almost singular category: a company generating EBITDA margins approaching 70% at a revenue base of over $22 billion per quarter — and growing.

Q2 FY2026 results showed Adjusted EBITDA of $15.244 billion on revenue of $22.187 billion, a margin of 68.7%. Q3 guidance implies EBITDA of approximately $20 billion on projected revenue of $29.4 billion — a margin of approximately 68%. At this scale, Broadcom may be the most profitable large technology company in the world on an EBITDA basis.

Understanding the Margin Architecture

The Adjusted EBITDA margin rests on three structural pillars. The first is the semiconductor design business, which generates non-GAAP gross margins in the high 70s when Amortisation and Stock Compensation are excluded. The second is the infrastructure software business — principally VMware — generating recurring subscription revenues with operating margins typical of mature enterprise software. The third pillar is operating leverage: costs grow more slowly than revenue.

In Q2 FY2026, non-GAAP R&D expense was $1.600 billion against revenue of $22.187 billion, a ratio of 7.2%. Non-GAAP SG&A was $581 million, or 2.6% of revenue. Together, these operating cost lines are extraordinarily lean for a company of this complexity.

GAAP vs Non-GAAP: The Honest Reconciliation

GAAP operating income in Q2 was $10.788 billion versus non-GAAP operating income of $14.928 billion. The difference of approximately $4.1 billion reflects amortisation of Acquisition-related intangibles ($1.967 billion), stock-based compensation ($2.092 billion), and restructuring charges ($81 million). The amortisation charge does not represent current-period cash outflow; stock-based compensation of $2.092 billion per quarter is real economic dilution and should not be entirely dismissed when assessing underlying margins.

The Compounding Implication

What makes Broadcom's margin profile remarkable is not just its level but its direction. Adjusted EBITDA grew 52% year-over-year in Q2, ahead of revenue growth of 48%. Margins are expanding as the business scales. If Q3 Adjusted EBITDA arrives at approximately $20 billion as implied by guidance, the first three quarters of FY2026 will have generated approximately $48 billion in Adjusted EBITDA. A business generating that level of Earnings with minimal incremental Capital requirements is precisely the kind of compounding machine that long-term quality investors should study with great care.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or Investment recommendation. All data sourced from Broadcom Inc. Q2 FY2026 earnings release dated June 3, 2026. Past performance is not indicative of future results. Investors should conduct their own Due Diligence.