Broadcom vs Microsoft. Both Are Winning the AI Race. Only One Is Priced Like It

Broadcom (NASDAQ:AVGO) and Microsoft (NASDAQ:MSFT) some delivered AI-fueled quarters revealing 2 antithetic playbooks. Broadcom sells customized silicon and switches for hyperscaler information centers. Microsoft sells cloud, copilots, and the productivity furniture connected top. Comparing them shows however the AI buildout splits betwixt picks-and-shovels suppliers and full-stack level owners.

Custom Silicon Surges While Azure Carries Microsoft

Broadcom's Q1 FY2026 net study landed connected March 4, 2026, with gross of $19.311 billion, up 29.47% twelvemonth implicit year. AI semiconductor gross deed $8.40 billion, increasing 106%. CEO Hock Tan called the maturation "driven by robust request for customized AI accelerators and AI networking" and guided Q2 AI gross to $10.70 billion. VMware kept the bundle broadside level astatine $6.796 billion, increasing conscionable 1%. The spot broadside is driving results.

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Microsoft reported Q3 FY2026 connected April 29, 2026 with gross of $82.886 billion, up 18.3%, and EPS of $4.27. Azure and unreality services grew 40%, and the AI tally complaint deed $37 billion, up 123%. Commercial RPO of $627 cardinal astir doubled, signaling a backlog that extends this cycle. Microsoft spent $30.876 cardinal successful a azygous quarter, up 84.39%. Some funds are buying Broadcom switches and accelerators.

Picks and Shovels vs. Full Stack

Broadcom repurchased $7.8 cardinal successful Q1 alone. Microsoft is funneling currency into capableness the $627 cardinal RPO suggests is presold. The marketplace has rewarded the capex spender: AVGO is up 32.32% since its net report, portion MSFT has slipped 3.93%.