Broadcom’s AI Boom Fuels Record $15B Quarter, Stock Dips Despite Upbeat Outlook

• Broadcom Inc. (AVGO) reported Q2 earnings of $1.58 per share and revenue of $15.00 billion, surpassing estimates, with AI revenue growing 46% year-over-year to $4.4 billion, driven by strong demand for AI networking solutions.
• The company issued Q3 revenue guidance of $15.80 billion, above consensus, with AI semiconductor revenue expected to reach $5.1 billion, marking ten consecutive quarters of growth.
• Despite the strong results, Broadcom’s stock fell 5.48% to $245.41 in after-hours trading while the company returned $7 billion to shareholders through dividends and stock repurchases.

Broadcom Inc. (AVGO) reported a robust performance for its fiscal second quarter ending April 2025, with financial results that slightly exceeded Wall Street expectations, though its stock experienced a 5.48% decline to $245.41 in after-hours trading on Thursday. The company delivered earnings of $1.58 per share, excluding non-recurring items, surpassing analyst estimates of $1.57 by a penny. Revenue for the quarter reached $15 billion, a 20.2% increase year-over-year, aligning closely with the consensus estimate of $14.96 billion.

The standout driver of Broadcom’s performance was its artificial intelligence (AI) segment, which generated $4.4 billion in revenue, a 46% year-over-year increase, meeting the company’s prior guidance. This growth was fueled by strong demand for AI networking solutions, particularly from hyperscale partners scaling their infrastructure to meet the rising computational needs of AI applications. CEO Hock Tan highlighted the company’s momentum, stating, “Broadcom achieved record second quarter revenue on continued momentum in AI semiconductor solutions and VMware.” He further noted that AI semiconductor revenue is expected to accelerate to $5.1 billion in the third quarter, marking ten consecutive quarters of growth.

Beyond AI, Broadcom’s broader financial metrics underscored its operational strength. Adjusted EBITDA rose 35% year-over-year to $10.0 billion, reflecting a resilient business model. Free cash flow reached a record $6.4 billion, up 44% from the prior year, enabling the company to return $7.0 billion to shareholders through $2.8 billion in cash dividends and $4.2 billion in stock repurchases. CFO Kirsten Spears emphasized, “Consolidated revenue grew 20% year-over-year to a record $15.0 billion,” highlighting the company’s ability to generate significant cash flow while maintaining disciplined capital allocation.

Looking ahead, Broadcom provided optimistic guidance for its fiscal third quarter ending July 2025, projecting revenue of $15.80 billion, above the consensus estimate of $15.75 billion. This guidance signals confidence in the ongoing demand for AI-driven solutions, particularly in networking and semiconductor technologies critical to data centers and cloud computing.

Broadcom’s performance reflects its strategic positioning in the rapidly evolving AI and semiconductor markets. The company has capitalized on the global surge in AI adoption, with its custom silicon and networking solutions playing a pivotal role in enabling large-scale AI workloads. Its acquisition of VMware has also bolstered its enterprise software portfolio, contributing to diversified revenue streams. However, the after-hours stock decline suggests investor caution, possibly due to broader market dynamics or expectations for even stronger outperformance.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 83% OFF ... Use Discount Code: JJT3A
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM