# Broadcom Inc. (AVGO) — Narrative, FY2026 Q2 Fiscal periods: Broadcom operates on a 52- or 53-week fiscal year ending the Sunday closest to October 31. Fiscal year 2025 ended November 2, 2025 (52 weeks); fiscal year 2024 ended November 3, 2024 (53 weeks). The second quarter of fiscal 2026 ended May 3, 2026. --- ## Business *From the FY2025 Form 10-K, accession 0001730168-25-000121.* Broadcom designs, develops and supplies semiconductor and semiconductor-based solutions and infrastructure software. Its lineage traces through AT&T/Bell Labs, Lucent and Hewlett-Packard, and it has been assembled through acquisition — LSI, Broadcom Corporation, Brocade, CA, Symantec Enterprise Security, and VMware. The stated strategy is sustained technology leadership in category-leading infrastructure products, pursued through heavy internal R&D plus acquisitions of businesses and technologies. **Two reportable segments.** - **Semiconductor solutions** — all semiconductor-based product lines plus IP licensing. - **Infrastructure software** — private cloud, mainframe software, cybersecurity and enterprise software portfolios, plus the fibre channel storage area network (FC SAN) business. ### Semiconductor solutions Products span complex digital and mixed-signal CMOS devices, III-V devices, network interface cards (NICs), modules, switches, subsystems and, in some cases, full racks. Five major end markets: - **Networking connectivity.** The AI engine of the company. **Custom silicon** — advanced IP platforms for customer-designed ASICs, including custom accelerators (XPUs) for hyperscalers, AI frontier-model companies and system integrators, sometimes delivered inside racks or systems. **Ethernet switching and routing** — high-capacity, low-latency switching silicon supporting virtualization and multi-pathing, scaling to tens of thousands of servers. **Ethernet NIC controllers.** **Physical layer devices (PHYs)** — DSP-architecture transceivers, including automotive Ethernet. **Fiber optic components** for Ethernet, storage, access, metro and long-haul telecom. - **Wireless device connectivity.** RF front-end modules and filters built on proprietary FBAR filter technology, Wi-Fi/Bluetooth combo chips, custom touch controllers, inductive charging ASICs. - **Servers and storage systems.** PCIe switches, SAS and RAID controllers/adapters, fibre channel host bus adapters, HDD read-channel SoCs and preamplifiers, custom flash controllers for SSDs. - **Broadband.** Set-top box SoC platforms (cable, satellite, IPTV, OTT, terrestrial) and broadband access SoCs (DSL, cable, PON, WLAN) for CPE and central office. - **Industrial.** Optocouplers, industrial fiber optics, sensors, motion encoders, LEDs and Ethernet ICs for factory automation, power generation and distribution, medical, defense and aerospace, and vehicle subsystems. The AI positioning is explicit: Broadcom's solutions let customers build AI data center infrastructure for training and inference, moving data across open, standards-based Ethernet, and enabling accelerated compute and networking connectivity within and across AI server racks and across AI data center sites. Customers are hyperscalers, AI frontier-model companies, OEMs and system integrators. ### Infrastructure software Five portfolios: - **Private cloud.** VMware Cloud Foundation (VCF) is the anchor — integrated compute, networking, storage, management and security, with native Kubernetes for VMs and containers on one platform, plus advanced services customers can add (vDefend, Avi Load Balancer, Tanzu Platform, VMware Private AI, VMware Live Recovery). Also VCF Edge, vSphere Foundation and Telco Cloud Platform. VCF offers license portability between on-premises data centers and supported cloud endpoints. - **Application networking and security** (vDefend zero-trust lateral security, Avi Load Balancer) and **application development and data services** (Tanzu). - **Mainframe software.** AIOps and automation, databases and data management, DevX/DevOps, cybersecurity and compliance, foundational and open mainframe solutions, plus "Beyond Code" enablement programs. - **Cybersecurity.** Symantec and Carbon Black endpoint security, network security, information security, application security, and identity and access management. - **Enterprise software and FC SAN management.** AIOps, automation and network observability, DevOps and value stream management; plus FC SAN modules, switches and subsystems with their management software. Customers are large enterprises — most of the Fortune 500 — plus government agencies, sold directly and through resellers, distributors, hyperscale cloud providers, value-added OEMs and VMware cloud service provider partners. Management is focused on an enterprise-wide license model and on deepening penetration of existing core, mainframe, VMware and Symantec endpoint accounts. ### Manufacturing and supply chain A deliberately variable, low-cost, primarily outsourced model. Most front-end wafer manufacturing is outsourced to external foundries including TSMC; a significant majority of assembly and test goes to third parties including TSMC, ASE, Foxconn, Amkor and Siliconware Precision. Internal fabs are reserved for proprietary processes — FBAR filters for wireless, and GaAs/InP lasers for fiber optics — with most internal III-V wafer fabrication in the U.S. and Singapore. Sole-source internal facilities include Fort Collins, Colorado (FBAR filters) and Breinigsville, Pennsylvania (InP wafers). Materials come from hundreds of suppliers, generally on purchase orders. The primary product warehouse is in Malaysia, and revenue for the majority of products is recognized when title and control transfer in Penang, Malaysia. ### Distribution, IP and people Distributors and OEMs (or their contract manufacturers) account for the substantial majority of semiconductor sales, supported by a direct sales force for large OEM accounts. As of November 2, 2025 Broadcom held approximately 19,000 U.S. and other patents with 2,170 pending applications, expiring between 2025 and 2044, and is not substantially dependent on any single patent. A portion of revenue comes from IP licensing royalties and litigation settlements. Headcount was approximately 33,000 worldwide at fiscal year-end 2025, roughly 57% in R&D roles; about 49% in North America, 36% in Asia, 15% in EMEA. Fiscal 2025 voluntary attrition was approximately 4.1%. ### Taxes Singapore Economic Development Board incentives apply reduced rates to qualifying Singapore income and are scheduled to expire through November 2030 (the otherwise-applicable Singapore corporate rate is 17%); a Malaysian tax holiday runs to 2028. Before indirect taxes, these incentives reduced the income tax provision by roughly $2,709 million in fiscal 2025 and $2,261 million in fiscal 2024. Global minimum tax regimes began applying in fiscal 2025, and Singapore's takes effect in fiscal 2026 — management expects a material impact on fiscal 2026 results of operations and cash flows. --- ## Risk factors *From the FY2025 Form 10-K, accession 0001730168-25-000121, as updated and restated in the Q2 FY2026 Form 10-Q, accession 0001730168-26-000054.* **Customer concentration is extreme and rising.** Broadcom has historically depended on a small number of end customers, OEMs, their contract manufacturers and certain distributors. Sales to distributors were 56% of net revenue in the first two quarters of fiscal 2026; the top five end customers were approximately 45% of net revenue. Loss of, or a material demand reduction from, any top-five customer would materially hurt results. Customers can cancel, reduce or delay orders, develop competing products internally, pursue customer-owned tooling, or be constrained by their own capital. **The AI business model itself is a named risk.** Top customers, including AI customers, are making greater pricing and contractual demands — seeking to *lease* Broadcom's custom XPUs, or requiring Broadcom to purchase and then lease them full AI racks or systems based on its XPUs rather than buying chips or racks outright, and seeking alternative financing arrangements and novel or deferred payment models. Broadcom warns these arrangements may not deliver the revenue, free cash flow or profitability it or investors expect; they have and may impose financial obligations including backstops or guarantees; and they increase exposure to credit and customer default risk. Some AI customers have constrained resources or capital and may be unable to pay for the AI infrastructure they need. **Gross margin dilution from the AI mix.** Semiconductor gross margin is structurally lower than infrastructure software gross margin. Management states plainly that selling custom XPUs, network switches and other AI products — including the sale or leasing of AI racks or systems — will likely increase operating margin but compress or lower future gross margin, which would adversely affect the stock price. **Cyclicality and an AI upturn that may not last.** The semiconductor industry is highly cyclical, subject to rapid price erosion and swings in supply and demand, and is described as undergoing profound change from AI adoption, having "experienced a significant upturn, which may not be sustainable." **Foundry dependence.** Approximately 95% of wafers manufactured by contract manufacturers in the first two quarters of fiscal 2026 were produced by TSMC. Broadcom believes its requirements are a meaningful portion of TSMC's total capacity, but TSMC also serves competitors, could prioritize others or cut deliveries on short notice, and has raised and may raise prices. There are generally no long-term capacity commitments — substantially all manufacturing is on purchase orders with no minimums. Separately, more than three-quarters of manufacturing materials came from five suppliers, some single-sourced, over the same period. **Concentrated physical footprint.** Fort Collins and Breinigsville are sole sources for FBAR filters and InP wafers respectively. Many Broadcom, contract-manufacturer and supplier facilities sit in California and the Pacific Rim, regions with above-average seismic, wildfire and severe-weather exposure. Most R&D personnel are in the U.S. and India; the primary warehouse is in Malaysia. **Design-win economics.** Winning semiconductor business requires large up-front engineering spend against a single customer opportunity, with no guarantee of sales; losing a generation can foreclose subsequent ones. Custom products may not be resellable to other customers, risking excess inventory that cannot be recouped. **Geopolitics, trade and regulation.** Export controls (including the U.S. Export Administration Regulations), restricted-entity listings, tariffs and retaliatory measures can limit who Broadcom can sell to and buy from. China (including Hong Kong) shipment/delivery destinations were 17% of fiscal 2025 net revenue (20% in fiscal 2024), though management believes ultimate end-customer exposure to China is smaller. The company notes tariffs including semiconductor-related tariffs have not been material to date but could materially increase costs and disrupt supply. Broadcom has been and may be subject to regulatory investigations into its contracting and business practices in Korea, Japan and the European Union. **Software franchise risk.** Growth depends on demand for the data center virtualization portfolio and customer acceptance of the subscription licensing model and simplified portfolios. If businesses shift workloads to public cloud, the addressable market for virtualization deployments shrinks. Many software customers hold multi-year enterprise agreements with no obligation to buy more and, in many cases, termination rights — the relative volume of contracts signed with termination rights causes material period-to-period revenue variation. As of May 3, 2026, approximately 64% of contract liabilities related to contracts subject to termination-for-convenience provisions. **Cybersecurity.** Broadcom is both a target and a supplier of security software. It discloses it has been subject to disruptive cyber-attacks and unauthorized network intrusions (none material to date), that elements of its proprietary source code have been exposed in an unauthorized manner in the past, and that its logging and detection mechanisms have technical limitations that have led to gaps in visibility. AI is increasing the pace of vulnerability discovery and the effectiveness of threat activity. **Leverage.** Aggregate indebtedness was $66,720 million as of May 3, 2026. Consequences cited include vulnerability to adverse conditions, reduced flexibility, competitive disadvantage, harder incremental borrowing and diversion of operating cash flow to debt service. Broadcom also flags financing arrangements in which it provides a backstop or guarantee to support strategic initiatives, which increase fixed obligations and reduce financial flexibility. **Tax.** Global minimum tax adoption in a country where Broadcom holds an existing incentive has already materially increased its provision; further adoptions could compound it. The One Big Beautiful Bill Act and other policy changes may materially affect the provision, net income and cash flow. If the November 2021 VMware spin-off from Dell is determined not to have been tax-free — including if the VMware acquisition caused the spin-off to fail Section 355 qualification — Broadcom could be liable for or required to indemnify material tax liabilities. **Key person.** Success depends in large part on senior management and particularly on Hock E. Tan, President and CEO. No senior manager is bound by a written employment contract and the company carries no key person life insurance. **Other named risks.** Quarterly and annual result volatility from order timing, software contract timing and terminations, factoring arrangements, and AI rack/system delivery and payment timing; acquisition and integration risk and divestiture risk; IP litigation both defensive and offensive; warranty, recall and product liability exposure that in some agreements with large customers is potentially unlimited; product complexity, defects and bugs; open source license obligations; privacy and data security law compliance; government contract requirements; corporate responsibility regulation; technical standards and hazardous materials compliance; stock price volatility; and discretionary, non-obligatory stock repurchases. --- ## Management's discussion and analysis — fiscal year 2025 *From the FY2025 Form 10-K, accession 0001730168-25-000121. Fiscal year 2025 ended November 2, 2025; fiscal year 2024 ended November 3, 2024.* ### Results | (In millions) | FY2025 | FY2024 | |---|---|---| | Products revenue | 44,847 | 34,960 | | Subscriptions and services revenue | 19,040 | 16,614 | | **Total net revenue** | **63,887** | **51,574** | | Gross margin | 43,294 (68%) | 32,509 (63%) | | Research and development | 10,977 | 9,310 | | Selling, general and administrative | 4,211 | 4,959 | | Amortization in operating expenses | 2,031 | 3,244 | | Restructuring and other charges (opex) | 591 | 1,533 | | **Operating income** | **25,484 (40%)** | **13,463 (26%)** | | Net income | 23,126 | 5,895 | Diluted EPS was $4.77 in fiscal 2025 versus $1.23 in fiscal 2024. Fiscal 2025 included $7,800 million of upfront license revenue within products revenue; $4,601 million of fiscal 2024 upfront license revenue was reclassified from subscriptions and services to products revenue to conform. **By segment:** | (In millions) | FY2025 revenue | FY2024 revenue | FY2025 operating income | FY2024 operating income | |---|---|---|---|---| | Semiconductor solutions | 36,858 | 30,096 | 21,232 | 16,759 | | Infrastructure software | 27,029 | 21,478 | 20,765 | 13,977 | | Unallocated expenses | — | — | (16,513) | (17,273) | | **Total** | **63,887** | **51,574** | **25,484** | **13,463** | Semiconductor revenue rose 22% on strong demand for networking solutions, primarily custom AI accelerators and AI networking products. Infrastructure software revenue rose 26% on strong VCF demand, including license revenue recognized on contracts where customers do not have the right to terminate, and the transition to a subscription license model. Software operating income rose 49%, helped further by lower labor costs after the VMware integration. ### Drivers and line items Gross margin expanded five points to 68%, attributed to higher software revenue and strong AI semiconductor demand, and within software to higher license revenue and lower post-integration labor costs. R&D rose $1,667 million (18%), primarily on higher stock-based compensation. SG&A fell $748 million (15%) on lower headcount-driven compensation and lower VMware acquisition costs, partly offset by higher stock-based compensation. Amortization of acquisition-related intangibles in operating expenses fell $1,213 million (37%) as customer-related intangibles from pre-VMware software acquisitions finished amortizing. Restructuring and other charges in operating expenses fell $942 million (61%) on lower VMware-integration termination costs. Stock-based compensation was $7,568 million in fiscal 2025 versus $5,670 million in fiscal 2024. In the quarter ended May 4, 2025, Broadcom granted two-year time- and market-based RSU awards in place of the annual second-quarter grant; each award vests on the basis of two annual grants with staggered vesting start dates of March 15, 2025 and March 15, 2026 and successive four-year vesting periods, expensed over four to five years. The increase was driven by these awards' higher grant-date fair values, partly offset by full vesting and forfeitures of assumed VMware awards. Remaining weighted-average service period: 3.4 years. Interest expense fell to $3,210 million from $3,953 million on lower debt balances and refinancing at lower effective rates. Other income, net was $455 million versus $406 million, helped by a gain on sale of a business and hurt by lower interest income. Taxes swung to a **benefit** of $397 million in fiscal 2025 from a $3,748 million provision in fiscal 2024. The fiscal 2025 benefit came from recognition of uncertain tax benefits on expiring statutes of limitations and audit settlements plus excess stock-award benefits, partly offset by operating income and a **$1,321 million valuation allowance** established against corporate alternative minimum tax credit carryforwards after the July 4, 2025 enactment of the One Big Beautiful Bill Act. The fiscal 2024 provision was driven by a non-recurring intra-group transfer of IP rights to the U.S. ### Acquisitions and divestitures - **VMware** — acquired November 22, 2023 for approximately $30,788 million cash plus 544 million Broadcom shares valued at $53,398 million, with $8,250 million of VMware senior unsecured notes assumed. Cash consideration was funded with 2023 Term Loan proceeds and cash on hand. - **VMware end-user computing (EUC)** — sold to KKR & Co. Inc. on July 1, 2024 for $3.5 billion cash after working capital adjustments. - **Seagate System-on-Chip operations** — certain design, development and manufacturing assets acquired April 23, 2024 for $600 million. ### Liquidity and capital returns Fiscal 2025 highlights: $27,537 million cash from operations, $11,142 million of dividends paid, $2,450 million of stock repurchased. Dividends declared were $2.360 per share versus $2.105 in fiscal 2024. At November 2, 2025 liquidity consisted of $16,178 million cash and cash equivalents, operating cash flow, and an undrawn $7.5 billion unsecured revolving credit facility. Total indebtedness was $67,120 million with $3,152 million payable within twelve months. Management stated it expects capital expenditures to be higher in fiscal 2026 than in fiscal 2025. Working capital rose to $13,059 million from $2,898 million, driven by trade receivables ($7,145 million from $4,416 million on higher billings) and other current assets ($5,980 million from $4,071 million on higher software contract assets), partly offset by short-term debt rising to $3,152 million from $1,271 million as senior notes came due. Cash from operations increased $7,575 million year over year, from $17,231 million higher net income offset by $5,973 million lower non-cash deferred and other tax adjustments and $3,863 million from working capital changes. Cash used in investing fell $22,490 million, chiefly because fiscal 2024 carried $25,416 million paid for VMware net of cash acquired, partly offset by $3,185 million lower proceeds from business sales. Cash used in financing rose $18,394 million to $20,127 million, reflecting the absence of fiscal 2024's VMware term-loan proceeds plus debt repayments and higher dividends, offset by lower buybacks and lower employee withholding tax payments. In April 2025 the Board authorized up to $10 billion of repurchases through December 31, 2025, later extended to December 31, 2026. Fiscal 2025 repurchases were 16 million shares for $2,450 million, leaving $7,550 million authorized at year end. Broadcom also withheld 17 million shares in fiscal 2025 (38 million in fiscal 2024) for net share settlement of employee awards. Firmly committed remaining performance obligations under multi-year semiconductor and software contracts were approximately **$33.3 billion** at November 2, 2025, with about 35% expected to be recognized within twelve months. --- ## Current quarter — Q2 fiscal 2026 (quarter ended May 3, 2026) *From the Form 10-Q for the quarterly period ended May 3, 2026, accession 0001730168-26-000054, filed June 9, 2026.* ### Results | (In millions) | Q2 FY2026 | Q2 FY2025 | H1 FY2026 | H1 FY2025 | |---|---|---|---|---| | Products revenue | 16,892 | 10,309 | 31,022 | 20,452 | | Subscriptions and services revenue | 5,295 | 4,695 | 10,476 | 9,468 | | **Total net revenue** | **22,187** | **15,004** | **41,498** | **29,920** | | Gross margin | 15,415 (69%) | 10,197 (68%) | 28,572 (69%) | 20,342 (68%) | | Research and development | 2,995 | 2,693 | 5,960 | 4,946 | | Selling, general and administrative | 1,055 | 1,083 | 2,074 | 2,032 | | **Operating income** | **10,788 (49%)** | **5,829 (39%)** | **19,351 (47%)** | **12,089 (40%)** | | Net income | 9,310 | 4,965 | 16,659 | 10,468 | | Diluted EPS | $1.91 | $1.03 | $3.41 | $2.17 | Revenue grew 48% year over year in the quarter and 39% in the half. Operating margin expanded ten points to 49%. Upfront license revenue of $1,964 million (quarter) and $3,719 million (half) was included in products revenue. **By segment:** | (In millions) | Q2 FY2026 | Q2 FY2025 | % change | H1 FY2026 | H1 FY2025 | % change | |---|---|---|---|---|---|---| | Semiconductor solutions revenue | 15,009 | 8,408 | +79% | 27,524 | 16,620 | +66% | | Infrastructure software revenue | 7,178 | 6,596 | +9% | 13,974 | 13,300 | +5% | | **Total net revenue** | **22,187** | **15,004** | **+48%** | **41,498** | **29,920** | **+39%** | | Semiconductor operating income | 9,281 | 4,806 | | 16,784 | 9,512 | | | Infrastructure software operating income | 5,647 | 4,987 | | 10,970 | 10,109 | | The mix has flipped hard toward semiconductors: 68% of revenue in Q2 FY2026 versus 56% a year earlier (66% versus 56% for the half). Semiconductor growth is attributed to strong demand for networking solutions, primarily custom AI accelerators and AI networking products; software growth to strong VCF demand. Gross margin percentage improved to 69% — the benefit of revenue growth partly offset by the heavier mix of lower-margin semiconductor revenue, exactly the dynamic flagged in the risk factors. R&D rose $302 million (11%) in the quarter and $1,014 million (21%) in the half on higher stock-based compensation. SG&A fell $28 million (3%) in the quarter and rose $42 million (2%) in the half, with higher stock-based compensation substantially offset by lower acquisition-related costs. Stock-based compensation was $2,092 million in the quarter and $4,268 million in the half, up from $1,771 million and $3,051 million, on the full-period impact of the fiscal 2025 Two-Year Equity Awards; remaining weighted-average service period is 3.0 years. Unallocated expenses rose 4% in the quarter and 12% in the half on that compensation. Interest expense was $776 million in the quarter (up from $769 million on a debt extinguishment loss) and $1,577 million in the half (down from $1,642 million on lower balances and refinancing). Other income, net was $118 million in the quarter and $551 million in the half, versus $25 million and $128 million — the half including a **$315 million gain from reversal of excise tax charges** on the VMware acquisition after final Inflation Reduction Act regulations exempted acquisition stock purchases. The tax provision was $820 million in the quarter and $1,666 million in the half, against $120 million and $107 million a year earlier, on higher pre-tax income. Broadcom expects to remain subject to CAMT for fiscal 2026 and beyond and continues to carry a full valuation allowance against its CAMT credits. ### Customer and channel concentration widened sharply Direct sales to one semiconductor distributor were **42%** of net revenue for both the quarter and the half, up from 29% a year earlier. The top five end customers were approximately **45%** of net revenue, up from 40%. Sales to distributors overall were 56% of half-year net revenue. ### Backlog Firmly committed remaining performance obligations were approximately **$164.6 billion** at May 3, 2026 — against $33.3 billion at November 2, 2025 — with roughly 30% expected to be recognized as revenue over the next twelve months. The filing attributes the jump to a **long-term contract for custom AI accelerators entered during the quarter ended May 3, 2026**. Contract assets were $10,399 million (from $8,922 million) and contract liabilities $14,242 million (from $13,016 million). About 64% of contract liabilities relate to contracts with termination-for-convenience rights. ### Commitments Contractual purchase commitments as of May 3, 2026 totaled **$128,110 million**, concentrated in fiscal 2027 ($55,214 million) and fiscal 2028 ($72,870 million), plus $4,105 million of other contractual commitments. This is a step change in forward supply obligations, consistent with the custom AI accelerator contract signed in the quarter. A further $1,662 million of unrecognized tax benefits with accrued interest and penalties is excluded from the table because timing cannot be reliably estimated. ### Balance sheet, cash flow and capital returns Quarterly highlights: $10,493 million of cash from operations, $3,092 million of dividends paid, $600 million of stock repurchased. For the half: operating cash flow $18,753 million (from $12,668 million), investing outflow $323 million, financing outflow $14,980 million (from $12,237 million), net cash change +$3,450 million. The financing increase was driven by $6,000 million more in buybacks, offset by the prior year's $3,802 million of employee withholding tax payments — in the current year Broadcom settled those withholdings by selling a portion of vested shares rather than paying cash. Purchases of property, plant and equipment were $481 million for the half versus $244 million. Working capital rose to $23,351 million at May 3, 2026 from $13,059 million at November 2, 2025: - Cash and equivalents $19,628 million (from $16,178 million). - Trade receivables, net $10,830 million (from $7,145 million) on higher semiconductor revenue, billing timing and lower factoring. - **Inventory $4,328 million (from $2,270 million)**, built primarily to support higher expected shipments of custom AI accelerators. - Other current assets $7,427 million (from $5,980 million) on software contract assets and prepaid taxes. - Offset by other current liabilities of $13,139 million (from $11,673 million) on higher contract liabilities. Dividends declared and paid were $1.30 per share for the half ($6,178 million), versus $1.18 ($5,559 million). The April 2025 repurchase authorization was extended through December 31, 2026 and increased to $11 billion; in March 2026 the Board authorized an additional $10 billion program through December 31, 2026. The company repurchased 25 million shares for $8,450 million in the half (16 million for $2,450 million a year earlier), leaving $10.1 billion available at May 3, 2026. ### Debt Total debt principal was $66,720 million at May 3, 2026 versus $67,120 million at November 2, 2025; total debt net of $1,813 million unamortized discount and issuance costs was $64,907 million, split $2,252 million short-term and $62,655 million long-term. Estimated aggregate fair value was $62,505 million (approximately $64.6 billion at fiscal year end). During Q1 FY2026 Broadcom issued **$4,500 million of senior unsecured notes** — 4.300% due January 2031 ($750 million), 4.600% due January 2033 ($1,250 million), 4.950% due January 2036 ($1,250 million) and 5.700% due January 2056 ($1,250 million) — and repaid or redeemed $3,650 million of senior notes; during Q2 FY2026 it redeemed a further $1,250 million. The $7.5 billion revolving credit facility (maturing January 13, 2030) and the $4.0 billion commercial paper program were both undrawn at May 3, 2026 and at fiscal year end. A hypothetical 50 basis point move in market rates would change the fair value of borrowings by approximately $1.9 billion without affecting interest expense. ### Management commentary There were no significant changes in critical accounting estimates versus the FY2025 10-K. On macroeconomic factors, management cites financial market volatility, geopolitical events, supply constraints, government intervention, and increased trade tensions and tariffs with U.S. trading partners as risks that may cause net revenue to fluctuate significantly and disrupt supply chain operations. On legal matters, Broadcom states it does not believe the final outcome of any pending legal proceedings, regulatory investigations or tax disputes, individually or as a whole, will have a material adverse effect on its condensed consolidated financial statements, and no material loss contingency amounts were accrued or disclosed for the periods presented. Broadcom did not include forward revenue or earnings guidance in the quarterly report. --- ## Subsequent events *From the Form 10-Q for the quarterly period ended May 3, 2026, accession 0001730168-26-000054.* **Apollo AI rack financing arrangement and $29 billion backstop — June 8, 2026.** Broadcom arranged for **Apollo**, acting as investor partner, to take on certain agreements to purchase AI racks based on custom AI accelerators designed by Broadcom, together with the related lease agreements with a customer that enable that customer to access compute capacity. In connection with the arrangement, Broadcom entered into a **backstop agreement with Apollo covering the customer's lease obligations over five-year terms**. The backstop increases over time as the AI racks are deployed and decreases as the customer makes lease payments, with a **maximum exposure of $29 billion**. On a customer default, Broadcom has various remedies including assuming the lease or effecting a sale of the AI racks, which would reduce its maximum exposure. This is the concrete instance of the risk the filing describes in the abstract: customers seeking to lease rather than buy XPUs and racks, financed by third parties with Broadcom standing behind the obligation. It sits off the balance sheet as a contingent exposure, is roughly 44% of Broadcom's total debt principal in size, and is a credit exposure to a single customer. **Quarterly dividend declared — June 2, 2026.** The Board declared a quarterly cash dividend of **$0.65 per share**, payable June 30, 2026 to stockholders of record on June 22, 2026. For reference, the FY2025 Form 10-K (accession 0001730168-25-000121) reported one subsequent event: a quarterly cash dividend of $0.65 per share declared December 9, 2025, payable December 31, 2025 to holders of record December 22, 2025. No acquisitions, divestitures or litigation outcomes were reported as subsequent events in either filing.