Broadcom Q3 Earnings Beat Estimates, Shares Rise on Strong Q4 View

Broadcom AVGO reported third-quarter fiscal 2025 non-GAAP earnings of $1.69 per share, beating the Zacks Consensus Estimate by 1.81% and jumping 28% year over year.

Revenues rallied 22% year over year to $15.95 billion and beat the Zacks Consensus Estimate by 0.78%. 

AVGO shares were up more than 4.6% at the time of writing this article following solid third-quarter fiscal 2025 results. The stock has gained 32% year to date compared with the Zacks Computer & Technology sector’s appreciation of 14.9%.

AVGO’s Top-Line Growth Rides on Strong AI

Semiconductor solutions revenues (57.5% of net revenues) totaled $9.17 billion, up 26% year over year. The uptick was driven by the strong AI revenues, which surged 63% year over year to $5.2 billion. XPUs accounted for 65% of AI revenues in the reported quarter. 

Non-AI semiconductor revenues were flat sequentially at $4 billion. Broadband showed strong sequential growth, while enterprise networking and server storage were down sequentially. Wireless and industrial were flat sequentially.

Infrastructure software revenues (42.5% of net revenues) soared 17% year over year to $6.79 billion. The company booked $8.4 billion in the reported quarter.

AVGO’s Operating Details

The non-GAAP gross margin was 78% up 100 basis points (bps) year over year. Semiconductor gross margin declined 30 bps year over year to 67%. Infrastructure gross margin was 90%, up 300 bps year over year. 

Research and development expenses, as a percentage of net revenues, decreased 200 bps year over year to 9.3%. SG&A expenses, as a percentage of net revenues, decreased 170 bps to 3.6%.

Adjusted EBITDA rose 30% year over year to $10.7 billion. The adjusted EBITDA margin was 67.1% up 420 bps year over year.

The non-GAAP operating margin expanded 470 bps year over year to 65.5%. Semiconductor operating margin of 57% increased 130 bps year over year and flat sequentially. Infrastructure software operating margin was 77% compared with the operating margin of 67% in the year-ago quarter.

AVGO’s Balance Sheet & Cash Flow

As of Aug. 3, 2025, cash and cash equivalents were $10.72 billion compared with $9.47 billion as of May 4, 2025.

Total debt (including the current portion of $1.4 billion) was $64.23 billion as of Aug. 3, 2025, compared with $67.28 billion as of May 4, 2025.

Broadcom generated $7.17 billion in cash flow from operations compared with $6.56 billion in the previous quarter. The free cash flow was $7.02 billion compared with $6.41 billion in the prior quarter.

AVGO Offers Solid Q4 Guidance

For fourth-quarter fiscal 2025, Broadcom expects revenues of $17.4 billion, indicating 24% year-over-year growth. 

AI revenues are expected to grow 66% year over year to $6.2 billion, while non-AI semiconductor revenues are expected to grow low double digits sequentially to roughly $4.6 billion. Broadband, server storage and wireless are expected to improve, while enterprise networking is expected to decline sequentially.

Infrastructure Software revenues are expected to grow 15% year over year to $6.7 billion. 

Gross margin is expected to decline 70 bps sequentially. The adjusted EBITDA margin is expected to be 67% for the fourth quarter of fiscal 2025.

Zacks Rank & Stocks to Consider

Currently, AVGO has a Zacks Rank #3 (Hold).

Astera Labs ALAB, Amphenol APH and Reddit RDDT are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. 

Astera Labs, Amphenol and Reddit each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Astera Labs, Amphenol and Reddit is currently pegged at 47.8%, 20.6% and 34.9%, respectively.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research