Forty Percent From Five — a Different Number, DeliberatelyNarrow moat

Broadcom (AVGO) — moat facet

If the 32% customer were an end customer, the other four of the top five would be 2% each — which is why Broadcom reports end-customer concentration separately.

Alongside the 32% customer, Broadcom discloses that aggregate sales to its top five end customers, through all channels, were approximately 40% of net revenue in both fiscal 2025 and 20241. Read quickly, that looks like reassuring diversification. Read carefully, it is the more informative number.

Largest customer against top five end customers (% of revenue)Largest customerTop five endFY202118%35%FY202220%35%FY202321%35%FY202428%40%FY202532%40%Q3 FY2650%55%Largest = a distributor; top five traced through all channels. Forms 10-K, Q3 FY2026 10-Q
The gap between the two measures has closed from 17 points to 5: one distributor now carries nearly as much as the five largest end customers combined.

The arithmetic forces a conclusion. If one end customer were 32%, the remaining four of the top five would total about 8% — roughly 2% each, which does not describe the relationships Broadcom is known to have with the largest technology companies on earth. The reconciliation is that the two disclosures count different things: one counts a billing relationship, the other traces demand to the companies that actually use the chips.

This is the same structure Nvidia and Marvell disclose, and it produces the same blind spot. An end customer's demand can arrive through a distributor, a contract manufacturer and a direct order simultaneously, so no single line in the filing captures the dependency. What the 40% does tell you is that five organisations decide two fifths of Broadcom's revenue.

In the quarter to August 2026 the two had nearly converged: the distributor at 50%, the top five end customers at about 55%2. Watch this figure alongside the largest-customer share. The two moving together would mean genuine end-customer concentration is rising; the 32% rising while the 40% holds flat would mean the channel is consolidating rather than the customer base — a different problem, and a less dangerous one.

Moat trajectory: Holding steady

The top-five end-customer figure has been approximately 40% for two consecutive years, which is the one concentration measure at Broadcom that has not deteriorated. Selling to five organisations that decide two fifths of revenue is uncomfortable and unchanged — for a company at this position in the AI build-out, holding flat while the largest single relationship grew is mildly reassuring.

The number that tests this moat
Reported
Top five end customers, through all channels, latest quarter
About 55% in Q3 FY2026, from about 40%

Up fifteen points in a year as AI accelerators grew. The share stopping its rise would be the first evidence the non-AI business is keeping pace.

Source: Broadcom Form 10-Q, quarter ended 2 August 2026 ↗
References
  1. ReportedAlongside the 32% customer, Broadcom discloses that aggregate sales to its top five end customers, through all channels, were approximately 40% of net revenue in both fiscal 2025 and 2024.
    Broadcom Form 10-K, FY2025 — Significant Customer Information: during fiscal years 2025, 2024 and 2023 one customer accounted for 32%, 28% and 21% of net revenue respectively, with that revenue included in the semiconductor solutions segment; one customer accounted for 44% and 18% of net accounts receivable as of November 2, 2025 and November 3, 2024; sales to distributors accounted for 48% of net revenue in each of fiscal 2025 and 2024; aggregate sales through all channels to the top five end customers were approximately 40% of net revenue in each of fiscal 2025 and 2024; the company expects to continue to experience significant customer concentration — FY2025 (ended November 2, 2025) · publ. December 18, 2025 · source ↗
  2. ReportedIn the quarter to August 2026 the two had nearly converged: the distributor at 50%, the top five end customers at about 55%.
    Broadcom Inc., Form 10-Q for the quarter ended 2 August 2026 - remaining performance obligations approximately $179.2 billion, including a long-term contract for custom AI accelerators entered in the quarter ended 3 May 2026, about 25% expected within 12 months; one semiconductor customer, a distributor, 50% of net revenue in the quarter (32% a year earlier) and top five end customers about 55%; distributors 56% of net revenue for three quarters; purchase commitments $126,821M ($52,674M for fiscal 2027, $72,952M for fiscal 2028); operating income $15,955M (54% of revenue) against $5,887M (37%); infrastructure software revenue $8,752M (+29%) and operating income $7,325M (+40%), attributed to VMware Cloud Foundation including additional license revenue; subscriptions and services revenue $5,312M against $4,779M, products $24,279M against $11,173M — Quarter ended 2 August 2026 · publ. 2026-09-10 · source ↗
Sources
Generated September 22, 2026