AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Years of collaborative development, accumulated customer-specific IP and firmly committed multi-year contracts establish meaningful current advantages. Realized AI demand corroborates their commercial relevance; margins alone are not the basis.
durability · 2/4 · Long-standing relationships and multi-year commitments support persistence, but competitive selection and customer-owned tooling expose each technological generation to renewed competition. Contract size does not establish durability beyond its term.
customer dependency · 3/4 · Customer-specific engineering and substantial firm commitments demonstrate meaningful relationship dependence. Technical switching friction is inferred from collaborative development rather than measured, and future additional purchases remain discretionary.
erosion resilience · 2/4 · Strong realized demand and improved operating results counter a claim of current competitive collapse. Historical price erosion, concentrated customers and substitution options nevertheless leave resilience across future product cycles mixed.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Broadcom explicitly reports historical product selling-price reductions and past price erosion. These are realized adverse outcomes rather than hypothetical risks. Current aggregate growth cannot establish price realization separately from volume, product mix or license timing.
retention · 3/4 · Long-standing collaborative relationships, generally unexercised convenience termination rights and large firm multi-year commitments support strong continuity. Repeat demand is assessed partly from indirect operating and contractual evidence; no retention rate or software renewal cohort is disclosed.
margin resilience · 3/4 · Reported gross margin improved from 63% in fiscal 2024 to 68% in fiscal 2025. Fiscal 2026 nine-month gross profit and revenue also imply an improved gross margin. This demonstrates recent resilience, while low-cost upfront licenses and mix complicate attribution to pricing and limit conclusions across a full downturn.
contractual freedom · 2/4 · Firm multi-year commitments and generally restricted convenience termination demonstrate an ability to secure protective terms. Volume-based pricing roadmaps constrain price discretion, and contracts do not compel additional purchases or establish unilateral repricing rights.
Predictability92
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 12.93
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 4.67
Financial strength70
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 79.71
- netDebtEbitGrade
- 61.58
- interestCoverageGrade
- 63.08
- currentRatioGrade
- 76.43
- Debt / FCF (x)
- 2.42
- Net debt / operating income (x)
- 1.92
- Interest coverage (x)
- 7.94
- Current ratio (x)
- 1.71
Capital allocation62
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 22.70
- 3-year average dilution (%)
- 4.93
- 3-year average SBC / revenue (%)
- 9.68
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2026 nine-month operating cash generation of $32.95 billion supported distributions, $6.054 billion of net debt payments and higher cash. Against this, outstanding shares increased despite repurchases, working capital expanded and a five-year lease backstop carries $29 billion maximum exposure. Factoring also affects operating cash-flow interpretation. Outcomes support mixed rather than exceptional discipline.
incentive alignment · 2/4 · Actual compensation disclosures show predominantly variable pay and a granted multi-year CEO award, supporting alignment beyond stated philosophy. However, the newer award uses AI revenue, with payouts up to 300% of target, which does not directly establish returns on capital or credit-risk discipline. Actual executive ownership quantities and future vesting outcomes remain unavailable.
execution · 3/4 · Realized revenue and operating-income growth, strong operating cash generation and substantially completed VMware restructuring demonstrate successful recent execution. Attribution to management is partly indirect; AI market demand and revenue-recognition timing also contributed.
governance · 3/4 · Disclosed shareholder rights, annual director elections, separated chairman and CEO roles, an incumbent independent chairman and mandatory audit engagement preapproval support strong governance structures. Seven independent nominees are a nomination disclosure, not proof of subsequent election, and policies alone do not establish exceptional oversight effectiveness.
Evidence
Many of our major customer relationships have been in place for many years and are often the result of years of collaborative product development.
Business — customer relationships and collaborative development · Filed 18/12/2025
This has enabled us to build our extensive IP portfolio and develop critical expertise regarding our customers’ requirements, including substantial system-level knowledge.
Business — IP portfolio and customer system knowledge · Filed 18/12/2025
Many of our products have grown out of our own research and development efforts, and have given us competitive advantages in certain target markets due to performance differentiation.
Research and Development — issuer assertion of performance differentiation · Filed 18/12/2025
Fiscal Year: Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) 2026 (remainder) $ 2,029 2027 7,265 2028 5,178 2029 2,927 2030 822 Total $ 18,221 Segment Operating Results Fiscal Quarter Ended Three Fiscal Quarters Ended Operating Income by Segment August 2, 2026 August 3, 2025 $ Change % Change August 2, 2026 August 3, 2025 $ Change % Change (Dollars in millions) Semiconductor solutions $ 12,770 $ 5,217 $ 7,553 145 % $ 29,554 $ 14,729 $ 14,825 101 % Infrastructure software 7,325 5,238 2,087 40 % 18,295 15,347 2,948 19 % Unallocated expenses (4,140) (4,568) 428 (9) % (12,543) (12,100) (443) 4 % Total operating income $ 15,955 $ 5,887 $ 10,068 171 % $ 35,306 $ 17,976 $ 17,330 96 % Operating income from our semiconductor solutions segment increased for the fiscal quarter and three fiscal quarters ended August 2, 2026 compared to the prior year fiscal periods due to strong demand for our networking solutions, primarily custom AI accelerators and AI networking products.
MD&A — segment operating results and realized AI demand · Filed 10/09/2026
If we fail to timely develop new and enhanced products and technologies, if we focus on technologies that do not become widely adopted, if new competitive technologies that we do not support become widely accepted, if we are unable to successfully evolve our business strategy or execute on 36 Table of Contents our new business models such as those that enable our customers to access additional compute capacity, including through the purchase and leasing of AI racks or systems, or our customers proceed with customer-owned tooling, the demand for our products and solutions such as our custom AI accelerators or XPUs, network switches or other AI-related products may be reduced.
Risk Factors — technology adaptation and customer-owned tooling · Filed 10/09/2026
Customers could accelerate, delay or cancel plans, develop and use their own products, purchase products from our competitors, fail to qualify our products, reduce or discontinue use of our products, or fail to successfully market and sell their products, which could reduce demand for our products and cause us to hold a material amount of excess inventory, materially adversely affecting our business, financial condition and results of operations.
Risk Factors — customer cancellation, substitution and internal development · Filed 10/09/2026
Our semiconductor business is dependent on us winning competitive bid selection processes.
Risk Factors — competitive bid selection · Filed 10/09/2026
However, TSMC also fabricates wafers for other companies, including some of our competitors, and could choose or be required to materially prioritize capacity for other customers or reduce or eliminate deliveries to us on short notice.
Risk Factors — shared foundry supplier and capacity priority · Filed 18/12/2025
Certain multi-year customer contracts in our semiconductor solutions segment and infrastructure software segment, including contracts where customers do not have termination rights, contain firmly committed amounts and the remaining performance obligations under these contracts as of August 2, 2026 were approximately $179.2 billion.
Revenue note — committed multi-year remaining performance obligations · Filed 10/09/2026
These commitments include obligations under a long-term contract for custom AI accelerators entered in the fiscal quarter ended May 3, 2026.
Revenue note — long-term custom AI accelerator contract · Filed 10/09/2026
For contracts with termination for convenience rights, our customers generally do not exercise those rights.
Revenue note — customer behavior under convenience termination rights · Filed 10/09/2026
In addition, our customer agreements generally do not permit termination for convenience and accounting for such contracts can cause material variations in revenue recognized in each period and our operating results to fluctuate from time to time.
Risk Factors — customer agreements generally restrict convenience termination · Filed 10/09/2026
Remaining performance obligations do not include contracts for software, subscriptions or services where the customer is not committed.
Revenue note — exclusion of uncommitted software contracts · Filed 10/09/2026
In addition, we may also be unable to materially recoup our costs or resell our products to other customers due to the custom nature of certain products.
Risk Factors — limited resale and development-cost recovery for custom products · Filed 10/09/2026
We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 40% of our net revenue for each of the fiscal years 2025 and 2024.
Business — top-five end-customer concentration · Filed 18/12/2025
These customers often do not have a contractual obligation to purchase additional solutions.
Risk Factors — no obligation to purchase additional solutions · Filed 10/09/2026
The failure or inability to renew customer agreements of similar scope, on terms that are commercially attractive to us, could materially adversely affect our business, financial condition, operating results and cash flow.
Risk Factors — commercially attractive software renewals · Filed 10/09/2026
In the past, we have reduced the average selling prices of our products in anticipation of future competitive pricing pressures, new product introductions by us or our competitors and other factors.
Risk Factors — actual historical reductions in product selling prices · Filed 14/12/2023
In addition, some of our customer agreements provide for volume-based pricing and product pricing roadmaps, which can also reduce the average selling prices of our products over time.
Risk Factors — volume pricing and contractual pricing roadmaps · Filed 14/12/2023
In addition, increased competition and the existence of product alternatives, more complex engineering requirements, lower demand, shifts in spending priorities, constrained resources or capital of our customers, unfavorable changes in economic conditions, industry oversupply or reductions in our technological lead compared to our competitors, and other factors have in the past and may in the future lead to further price erosion, lower revenue and lower gross margin.
Risk Factors — historical price erosion and potential further pressure · Filed 18/12/2025
38 Table of Contents Results of Operations Fiscal Year 2025 Compared to Fiscal Year 2024 The following table sets forth our results of operations for the periods presented: Fiscal Year Ended November 2, 2025 November 3, 2024 November 2, 2025 November 3, 2024 (In millions) (As a percentage of net revenue) Statements of Operations Data: Net revenue: Products $ 44,847 $ 34,960 70 % 68 % Subscriptions and services 19,040 16,614 30 32 Total net revenue 63,887 51,574 100 100 Cost of revenue: Cost of products sold 12,115 9,805 19 19 Cost of subscriptions and services 2,371 2,983 4 6 Amortization of acquisition-related intangible assets 6,031 6,023 9 12 Restructuring charges 76 254 — — Total cost of revenue 20,593 19,065 32 37 Gross margin 43,294 32,509 68 63 Research and development 10,977 9,310 17 18 Selling, general and administrative 4,211 4,959 7 10 Amortization of acquisition-related intangible assets 2,031 3,244 3 6 Restructuring and other charges 591 1,533 1 3 Total operating expenses 17,810 19,046 28 37 Operating income $ 25,484 $ 13,463 40 % 26 % In fiscal year 2025, we included upfront license revenue of $7,800 million within products revenue.
MD&A — fiscal 2025 and 2024 consolidated operating results · Filed 18/12/2025
2 Table of Contents BROADCOM INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, 2026 August 3, 2025 August 2, 2026 August 3, 2025 (In millions, except per share data) Net revenue: Products $ 24,279 $ 11,173 $ 55,301 $ 31,625 Subscriptions and services 5,312 4,779 15,788 14,247 Total net revenue 29,591 15,952 71,089 45,872 Cost of revenue: Cost of products sold 6,983 3,098 15,689 8,515 Cost of subscriptions and services 641 606 1,915 1,758 Amortization of acquisition-related intangible assets 1,499 1,519 4,422 4,486 Restructuring charges 12 26 35 68 Total cost of revenue 9,135 5,249 22,061 14,827 Gross margin 20,456 10,703 49,028 31,045 Research and development 2,895 3,050 8,855 7,996 Selling, general and administrative 996 1,072 3,070 3,104 Amortization of acquisition-related intangible assets 507 507 1,520 1,524 Restructuring and other charges 103 187 277 445 Total operating expenses 4,501 4,816 13,722 13,069 Operating income 15,955 5,887 35,306 17,976 Interest expense (778) (807) (2,355) (2,449) Other income, net 98 205 649 333 Income before income taxes 15,275 5,285 33,600 15,860 Provision for income taxes 2,187 1,145 3,853 1,252 Net income $ 13,088 $ 4,140 $ 29,747 $ 14,608 Net income per share: Basic $ 2.75 $ 0.88 $ 6.26 $ 3.10 Diluted $ 2.68 $ 0.85 $ 6.09 $ 3.02 Weighted-average shares used in per share calculations: Basic 4,766 4,714 4,752 4,705 Diluted 4,887 4,860 4,884 4,841 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Unaudited statements of operations — fiscal 2026 comparative results · Filed 10/09/2026
In the fiscal quarter and three fiscal quarters ended August 2, 2026, we included upfront license revenue of $3,465 million and $7,184 million, respectively, within products revenue, and the related costs, which were immaterial, in cost of products sold, in our condensed consolidated statements of operations.
Revenue accounting — upfront license revenue and related costs · Filed 10/09/2026
The increase was primarily attributable to the following: •Cash and cash equivalents increased to $23,975 million at August 2, 2026 from $16,178 million at November 2, 2025, primarily due to $32,950 million in net cash provided by operating activities, offset in part by $9,281 million of dividend payments, $8,450 million of stock repurchases and $6,054 million of net debt payments.
Liquidity — operating cash generation, distributions and net debt payments · Filed 10/09/2026
CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED August 2, 2026 November 2, 2025 (In millions, except par value) ASSETS Current assets: Cash and cash equivalents $ 23,975 $ 16,178 Trade accounts receivable, net 13,707 7,145 Inventory 4,523 2,270 Other current assets 9,968 5,980 Total current assets 52,173 31,573 Long-term assets: Property, plant and equipment, net 3,144 2,530 Goodwill 97,801 97,801 Intangible assets, net 26,325 32,273 Other long-term assets 8,705 6,915 Total assets $ 188,148 $ 171,092 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 4,000 $ 1,560 Employee compensation and benefits 1,506 2,129 Short-term debt 2,252 3,152 Other current liabilities 13,080 11,673 Total current liabilities 20,838 18,514 Long-term liabilities: Long-term debt 57,167 61,984 Other long-term liabilities 10,453 9,302 Total liabilities 88,458 89,800 Commitments and contingencies (Note 10) Stockholders’ equity: Preferred stock, $0.001 par value; 100 shares authorized; none issued and outstanding — — Common stock, $0.001 par value; 29,000 shares authorized; 4,774 and 4,741 shares issued and outstanding as of August 2, 2026 and November 2, 2025, respectively 5 5 Additional paid-in capital 77,330 71,308 Retained earnings 22,151 9,761 Accumulated other comprehensive income 204 218 Total stockholders’ equity 99,690 81,292 Total liabilities and equity $ 188,148 $ 171,092 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Unaudited balance sheets — cash, debt, working capital and outstanding shares · Filed 10/09/2026
On June 8, 2026, we arranged for Apollo ("investor partner") to take on certain agreements to purchase AI racks based on custom AI accelerators designed by us and the related lease agreements with a customer that enable access to compute capacity.
Other Information — June 8, 2026 AI rack financing arrangement · Filed 09/06/2026
In connection with the arrangement, we entered into a backstop agreement with the investor partner for the customer’s lease obligations over 5-year terms.
Other Information — five-year customer lease backstop · Filed 09/06/2026
The backstop will increase over time as the AI racks are deployed and decrease as the customer makes payments on its lease obligations, with a maximum exposure of $29 billion.
Other Information — maximum backstop exposure · Filed 09/06/2026
As shown in the charts below, 96% of our CEO’s and 95% of our other NEOs’ average annualized target total compensation in fiscal 2025 is comprised of variable compensation, with a majority tied to long-term stock price performance (based on the annualized value of their equity awards and assuming target performance level attainment).
Compensation Discussion and Analysis — variable and long-term compensation mix · Filed 02/03/2026
In fiscal 2025, Mr. Tan received the 2025 Tan PSU Award (as defined below), which covers his annual LTI for fiscal 2028 through fiscal 2030.
Compensation Discussion and Analysis — granted 2025 CEO award covering fiscal 2028–2030 · Filed 02/03/2026
Q: Why is the performance metric of the 2025 Tan PSU Award based on AI Revenue and not on the price of Broadcom common stock?
Compensation Discussion and Analysis — CEO award AI revenue performance metric · Filed 02/03/2026
Mr. Tan may earn up to 300% of the Target PSUs.
Executive Compensation — maximum CEO PSU payout · Filed 02/03/2026
Some of our key governance practices include the following: ✔ Proxy access ✔ Annual election of all directors ✔ Ability to call special meetings by two or more stockholders holding at least 10% of outstanding shares ✔ Annual review of Board refreshment and composition ✔ No supermajority voting requirements for bylaw amendments ✔ Strong independent Board — 7 of 8 nominees are independent ✔ No “poison pill” ✔ Separate Chairman and CEO roles ✔ Annual say-on-pay vote ✔ Majority vote for directors in uncontested election ✔ Robust stock ownership guidelines for all executive officers and directors ✔ Independent directors regularly meet in executive session ✔ No hedging of stock by employees and directors ✔ Annual Board and committee evaluations ✔ No pledging of stock by employees or, unless a limited exception is approved, by executive officers or directors ✔ Active CEO and senior management succession review CODE OF ETHICS AND BUSINESS CONDUCT Our Board has adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) that is applicable to all members of our Board, employees, including executive officers, and certain contractors and consultants of Broadcom and its subsidiaries.
Corporate Governance — disclosed shareholder rights and board practices · Filed 02/03/2026
23 Table of Contents AUDIT COMMITTEE PRE-APPROVAL OF SERVICES POLICY All engagements with our independent registered public accounting firm, regardless of amount, must be authorized in advance by the Audit Committee.
Audit Committee — mandatory advance authorization of auditor engagements · Filed 02/03/2026
Samueli serves as our independent Chairman of the Board and Mr.
Corporate Governance — incumbent independent chairman · Filed 02/03/2026
With the strong adoption of VMware Cloud Foundation, our infrastructure software revenue increased 26% from $21.5 billion in fiscal 2024 to $27.0 billion in fiscal 2025.
Compensation Discussion and Analysis — software revenue growth and asserted adoption driver · Filed 02/03/2026
We have substantially completed these restructuring activities.
Restructuring note — substantial completion of VMware integration restructuring · Filed 18/12/2025
Accordingly, our remaining performance obligations disclosed above are not indicative of revenue for future periods.
Revenue note — limitations of remaining performance obligations · Filed 10/09/2026
We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring arrangements.
Supplemental Financial Information — non-recourse receivables factoring · Filed 10/09/2026
We account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the condensed consolidated statements of cash flows.
Supplemental Financial Information — factoring proceeds classified in operating cash flow · Filed 10/09/2026
