Core Viewpoint - Broadcom Inc. is expected to highlight its accelerating artificial intelligence (AI) business in its upcoming results, with a focus on fiscal 2026 revenue guidance and gross margin trends [1][2]. Revenue Guidance - Analyst James Schneider anticipates that Broadcom will raise its fiscal 2026 AI revenue guidance above the previous forecast of 100% year-over-year growth [4]. - Broadcom's fiscal 2026 and fiscal 2027 AI revenue is projected at $45.4 billion and $77.3 billion, indicating annual growth rates of +128% and +70% respectively [6]. Key Contributors - The contributions from Alphabet Inc.'s Google and OpenAI are expected to be significant in fiscal 2026, with investors closely monitoring Google's spending trends and OpenAI's role in the growth outlook [2][7]. - Investor expectations are elevated due to strong performance from peers like Nvidia Corp. and positive demand signals from Google following its Gemini 3 launch [3][5]. Gross Margin Trends - The gross margin progression for fiscal 2026 is a critical factor, with Broadcom's custom XPU business projected to grow over 160% year-over-year, which may lead to near-term margin dilution [8]. Market Reactions - Three main factors are likely to influence Broadcom's stock reaction on earnings day: the potential increase in fiscal 2026 AI revenue guidance, the expected contributions from Google and OpenAI, and the fiscal 2026 gross margin progression [7]. - The market is already anticipating an AI revenue guidance boost, and new data points on customer spending and design wins could impact near-term stock performance [9]. Earnings Estimates - Schneider has raised fiscal 2026 and fiscal 2027 earnings per share (EPS) estimates by approximately 14% and introduced EPS forecasts for fiscal 2028, 2029, and 2030 at $17.35, $20.00, and $22.40 respectively [10].

Financial Data and Key Metrics Changes - Marvell reported record revenue of $2,006 million, reflecting a 6% sequential increase and a strong 58% year-over-year growth [4][25] - Non-GAAP operating margin expanded by 870 basis points year-over-year to 34.8% [4] - Non-GAAP earnings per share reached $0.67, up 123% year-over-year [4][27] - Operating cash flow was $462 million, significantly up from $333 million in the first quarter [5][27] - GAAP gross margin was 50.4%, while non-GAAP gross margin was 59.4% [25][26] Business Line Data and Key Metrics Changes - Data center revenue was $1,490 million, growing 3% sequentially and 69% year-over-year, driven by custom XPU and XPU attached products [11][25] - Enterprise networking revenue was $194 million, and carrier infrastructure revenue totaled $130 million, with combined revenue growing 2% sequentially and 43% year-over-year [19] - Consumer market revenue was $116 million, up 84% sequentially and 30% year-over-year, primarily driven by gaming demand [21] - Automotive and industrial revenue was $76 million, flat both sequentially and year-over-year [21] Market Data and Key Metrics Changes - The data center end market now accounts for 74% of total revenue, up from 34% in 2024 [32] - The total addressable market (TAM) for data centers is projected to increase to $94 billion by 2028, a 26% increase from previous estimates [8] - The company expects data center revenue to continue delivering strong growth in the mid-thirty percent range year-over-year in the third quarter [12] Company Strategy and Development Direction - The divestiture of the automotive Ethernet business for $2,500 million aligns with the strategy to focus on AI opportunities in the data center market [6][7] - Marvell aims to grow its data center market share from 13% of a $33 billion TAM in 2024 to 20% of a $94 billion TAM by 2028 [8] - The company plans to consolidate non-data center end markets into a new single communications and other end market starting in the third quarter [7][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing momentum in the data center market, driven by AI demand [4][23] - The company anticipates overall revenue in the third quarter to be approximately $2,060 million, representing 36% year-over-year growth [22] - Management noted that the custom business is expected to see growth in the second half of the fiscal year compared to the first half [39] Other Important Information - Marvell has repurchased $540 million of stock in the first half of the fiscal year, with approximately $2 billion remaining in its authorization [5] - The company completed a public offering of notes totaling $1 billion, using most proceeds to repay existing debt [28] Q&A Session Summary Question: Guidance for the custom business and headwinds in Q3 - Management acknowledged the lumpiness in the custom business but expects a strong recovery in Q4, driven by optics business growth [37][39] Question: Clarity on design wins and revenue expectations - Management reported significant design activity and new design wins, with many opportunities in the billions of dollars [42][44] Question: Impact of supply constraints and tariffs - Management indicated tight supply chain conditions but has not seen significant impacts from tariffs [45][48] Question: Concentration among lead customers and timing of design wins - Management confirmed that initial programs are ramping and additional design wins are expected to contribute to revenue over the next 18-24 months [52][54] Question: Update on three nanometer XPU program - Management stated that initial programs are ramping and expressed confidence in growth from this program next year [106]