Joining me on today's call are Hock Tan, President and CEO; Kirsten Spears, Chief Financial Officer; Charlie Kawwas, President, Semiconductor Solutions Group; and Ram Velaga, President, Infrastructure Software Group. In our fiscal Q1 2026, total revenue reached a record $19.3 billion, and that's up 29% year-on-year and exceeding our guidance on the back of better than expected growth in AI semiconductors. This top-line strength translated into exceptional profitability with Q1 consolidated adjusted EBITDA hitting a record $13.1 billion, which is 68% of revenue. Looking ahead to next quarter, Q2 2026, we're guiding for consolidated revenue of approximately $22 billion, which represents 47% year-on-year growth.
In Q1, revenue was a record $12.5 billion, as year-on-year growth accelerated to 52%. This robust growth was driven by AI semiconductor revenue, which grew 106% year-on-year to $8.4 billion, way above our outlook. Driving this is AI revenue growth, which will accelerate very sharply to 140% year-on-year to $10.7 billion. For Google, we continue our trajectory of growth in 2026 with strong demand for the seventh generation Ironwood TPU.
In 2027 and beyond, we expect to see even stronger demand from next generations of TPU. For 2027, this demand is expected to surge in excess of 3 GW of compute. We have the track record to deliver these XPUs at high volumes at an accelerated time to market with very high yields. Consistent now with the strong outlook for our XPUs, demand for AI networking is accelerating.
| Metric | Period | Current guidance |
|---|---|---|
| Consolidated revenue | Q2 FY2026 | $22.0B, up 47% YoY |
| Semiconductor revenue | Q2 FY2026 | ~$14.8B, up 76% YoY |
| AI semiconductor revenue | Q2 FY2026 | $10.7B, up ~140% YoY |
| Infrastructure software revenue | Q2 FY2026 | ~$7.2B, up 9% YoY |
| Non-AI semiconductor revenue | Q2 FY2026 | ~$4.1B, up 4% YoY |
| Consolidated gross margin | Q2 FY2026 | ~77%, flat sequentially |
| Adjusted EBITDA margin | Q2 FY2026 | ~68% of revenue |
| Non-GAAP tax rate | Q2 / FY2026 | ~16.5% |
| AI (chip) revenue | FY2027 | Line of sight to in excess of $100 billion, supply secured |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +29% | Better-than-expected AI semiconductor growth and operating leverage. |
| AI semiconductor revenue | +106% | Ramp of custom AI accelerators across all five (now six) customers plus AI networking. |
| Semiconductor revenue | +52% | AI-driven acceleration to a record $12.5 billion. |
| Custom accelerator (XPU) revenue | +140% | Strong demand including Google's 7th-gen Ironwood TPU and other customer ramps. |
| AI networking revenue | +60% | Tomahawk 6 (100 Tbps) and 200G SerDes capturing hyperscaler demand; one-third of AI revenue. |
| Infrastructure software revenue | +1% | Seasonal renewals; VMware revenue itself up 13% with ARR up 19%. |
| Operating income | +31% | Record $12.8 billion; operating margin 66.4%, up 50 bps YoY. |
| Semiconductor operating margin | +260 bps | Strong operating leverage; margin 60%. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Custom XPU customer count | 5 customers | 6 customers with OpenAI added, deploying over 1 GW in 2027 | — |
| Anthropic compute | $10B + $11B TPU orders | Off to a good start on 1 GW of TPU compute in 2026; demand to surge above 3 GW in 2027 | — |
| 2027 AI revenue visibility | $73B AI backlog / over $100B implied | Explicit line of sight to over $100 billion of AI chip revenue in 2027, supply secured through 2028 | — |
| Customer-owned tooling (COT) threat | Called an overblown hypothesis | Reiterated; COT programs are ~2x less performant, no meaningful competition expected for many years | — |
| Gross-margin / rack dilution | Warned of AI/system-sale gross-margin dilution (Q4) | Reversed - it is a chips business, margins solid and stable; dilution impact not substantial | — |
| AI networking mix | One-third of AI revenue (Q1) | Guided to ~40% of AI revenue in Q2 | — |
| Scale-up interconnect | Copper direct-attach at 200G SerDes | Staying on Direct Attach Copper through 400G SerDes (2028), avoiding costlier/higher-power optics; CPO not needed yet | — |