Broadcom Inc.

Semiconductors • Technology • Palo Alto, CA, United States • AVGO (NMS)

650 427 6000 3421 Hillview Ave, Palo Alto, CA 94304, United States

Quarter: Q3 2025 Reported: September 4, 2025 Sentiment: Positive

Broadcom Inc. designs, develops, and supplies various semiconductor devices and infrastructure software solutions internationally. The company operates in two segments: Semiconductor Solutions and Infrastructure Software. The company offers networking connectivity, such as custom silicon solutions, ethernet switching & routing, ethernet NIC controllers, physical layer devices, and fiber optic components; wireless device connectivity, including RF semiconductor devices, connectivity solutions, custom touch controllers, and inductive charging ASICS; servers and storage system solutions, such as PCIE switches, SAS & raid products, fibre channel products, and HDD & SSD solutions; broadband solutions, includes set-top box, and broadband access; and industrial. The company also offers a private cloud software portfolio, including the VMware Cloud Foundation, Edge, vSphere foundation, telco cloud platform, private AI, live recovery, application networking and security, application development and data services; mainframe software, such as AIOPS & automation, database & data management, DEVX & DEVOPS, cybersecurity & compliance management, beyond code programs, foundational & open mainframe solutions; cybersecurity, such as endpoint, network, information, application security, and identity & access management; enterprise software; and fc san management. Its products are used in various applications in enterprise and data center networking, including artificial intelligence networking and connectivity, home connectivity, set-top boxes, broadband access, telecommunication equipment, wireless device and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.

Analysis Summary

Broadcom reported a stellar Q3 Fiscal Year 2025, with total net revenue reaching a record $15,952 million, marking a 22% increase year-over-year. Non-GAAP net income soared to $8,404 million, a 37.3% increase from Q3 2024, translating to a non-GAAP diluted EPS of $1.69, up 36.3%. GAAP net income was $4,140 million and GAAP diluted EPS was $0.85. Adjusted EBITDA reached $10,702 million, or 67% of revenue, reflecting a 30% year-over-year increase and strong operating leverage. The company generated a record $7,024 million in free cash flow, a 47% increase from the prior year, and returned $2.8 billion to shareholders through cash dividends. Cash and cash equivalents stood at $10,718 million.

Growth was primarily driven by the Semiconductor Solutions segment, which saw revenue increase by 26% year-over-year to $9,166 million. This was significantly fueled by custom AI accelerators and networking products, with AI revenue accelerating to 63% year-over-year, reaching $5.2 billion. The Infrastructure Software segment also contributed robustly, growing 17% year-over-year to $6,786 million, with VMware being a key driver. Management highlighted the continued strong investment from customers in AI, projecting AI semiconductor revenue to accelerate further to $6.2 billion in Q4, marking eleven consecutive quarters of growth.

CEO Hock Tan emphasized the record revenue performance and the accelerating strength in AI, networking, and VMware. CFO Kirsten Spears highlighted the strong operating leverage and record free cash flow, reinforcing the commitment to shareholder returns. For Q4 Fiscal Year 2025, Broadcom anticipates revenue of approximately $17.4 billion, a 24% increase year-over-year, and Adjusted EBITDA guidance of 67% of projected revenue, indicating continued confidence in their business trajectory.

Broadcom's strong performance in custom AI accelerators positions it favorably in the rapidly expanding AI market. The consistent growth in AI semiconductor revenue and the integration of VMware indicate successful strategic execution in critical, high-growth sectors like cloud and data center infrastructure.

The company acknowledges risks including global economic conditions, government regulations and trade tensions, potential loss of significant customers, cyclicality in the semiconductor industry, challenges in realizing expected benefits from the VMware acquisition, dependence on distributors and a limited number of suppliers, and the need to manage significant indebtedness. The provided transcript does not include an analyst Q&A section.

Key Highlights

• Record Q3 FY25 revenue of $15.95 billion, up 22% year-over-year.
• AI revenue accelerated 63% year-over-year to $5.2 billion in Q3, projected to reach $6.2 billion in Q4.
• Non-GAAP diluted EPS increased 36.3% to $1.69.
• Record free cash flow of $7.02 billion, up 47% year-over-year.
• Q4 FY25 revenue guidance of approximately $17.4 billion, a 24% increase year-over-year.
• Strong performance in both Semiconductor Solutions (up 26%) and Infrastructure Software (up 17%).
• Adjusted EBITDA reached $10.70 billion, or 67% of revenue, up 30% YoY.