Thursday, September 4, 2025

Broadcom (AVGO) -- September 4, 2025

Locator: 49015AVGO.

Updates

September 6, 2025: ChatGPT says the $10 billion most assuredly came from OpenAI and most assuredly NOT from Apple. 

Later, 6:51 p.m. CT: Broadcom (AVGO) "popped" on $10-billion customer. Link here. There are several story lines here for investors, but I'm traveling and don't have time. Quick: name a company with deep pockets -- who could easily afford $10 billion -- and a company that is very, very secretive, and a company that already has a very, very close relationship with Broadcom. [Regardless, Sophia is going to get a new pair of shoes this weekend. LOL.]



Original Post

GDPNow: 3.0 estimate for 3Q25; released today. Though 3.0 is still strong, it's been trending down.

AVGO
Broadcom (AVGO)
3Q25 Earings
Avgo reported strong third-quarter fiscal 2025 results, with record revenue and adjusted earnings that topped analyst expectations. The positive results were fueled by surging demand for AI products, custom AI accelerators, and a growing infrastructure software business, though the stock saw a slight dip in extended trading.

Third-quarter financial highlights:
  • Record Revenue: Broadcom reported revenue of $15.95 billion, a 22% increase year-over-year, and exceeded analyst estimates of $15.83 billion.
  • AI Revenue Jump: The company's AI-related revenue surged 63% year-over-year to $5.2 billion, driven by custom AI chips and AI networking solutions.
  • Adjusted Earnings Beat: Adjusted earnings per share (EPS) came in at $1.69, surpassing the consensus estimate of $1.66 and representing a 36.3% increase from the year-ago quarter. Infrastructure Software Growth: The infrastructure software segment, which includes VMware, accounted for 44% of sales and saw continued momentum.
Key growth drivers:
  • Accelerated AI Demand: CEO Hock Tan highlighted the strength of AI semiconductor solutions, including custom AI accelerators and networking products, as the primary driver of growth.
  • Hyperscaler Investment: The company is benefiting from ongoing investments in AI by large cloud computing companies like Alphabet and Meta.
  • VMware Integration: The strategic acquisition and integration of VMware have significantly boosted Broadcom's infrastructure software business.
Business outlook and market reaction:
  • Strong Guidance: Looking ahead to the fourth quarter of fiscal 2025, Broadcom projected revenue of approximately $17.4 billion, exceeding expectations.
  • Market Skepticism: Despite beating estimates, the stock slipped in extended trading. This may be due to high investor expectations, following a significant rally in Broadcom's share price over the past year.
  • Industry Context: The slight negative market reaction follows a similar trend seen with other AI chipmakers like Nvidia and Marvell Technology, whose stocks experienced short-term pullbacks after strong earnings reports.

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