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Beating Wall Street Estimates
According to analysts from London Stock Exchange Group (LSEG), Broadcom was expected to achieve earnings per share (EPS) of $1.49. However, the actual adjusted EPS was $1.60. Following this, the company also exceeded revenue projections.* Revenue was expected to be $14.61 billion, but the company crossed this line and reported $14.92 billion.
Strong performance led to positive outlooks for the second quarter. Broadcom expects revenue of $14.9 billion, which is higher than analysts' estimate of $14.76 billion. [1]
Compared to the same period last year, Broadcom experienced a 25% year-over-year increase in revenue, reaching $11.96 billion in Q1 2024. Even more impressive was the growth in net income, which rose to $5.5 billion ($1.14 per share), compared to $1.33 billion ($0.28 per share) the year before.*
AI Segment on the Rise
A closer look at the company's segment performance shows that one of the main growth drivers was artificial intelligence. Revenue from AI solutions reached $4.1 billion, reflecting a 77% year-over-year increase. This segment falls under the semiconductor division, which overall saw $8.21 billion in revenue, marking an 11% year-over-year growth.
Broadcom also expects AI revenue to rise to $4.4 billion in the second quarter. The company is already collaborating with three major cloud providers and two hyperscaler companies to develop its own AI chips. CEO Hock Tan also emphasized to CNBC that Broadcom is focusing only on large partners who can deploy its products on a massive scale, suggesting stability in its revenue stream.
Rapidly Growing Software Division
In addition to the AI segment, Broadcom's software division also showed strong growth, reporting revenue of $6.7 billion, a 47% year-over-year increase. This growth is largely the result of the VMware acquisition completed at the end of 2023, helping the company diversify its revenue and significantly reduce dependence on its semiconductor business.
Market Reaction
Broadcom's stock saw nearly a 20% increase in after-hours trading following the release of these results on March 6, 2025. This suggests that the price positively responded not only to the strong earnings but also to the optimistic outlook for the next quarter. As of March 10, 2025, the stock price had dropped to $186.*
Source: Tradingeconomics.com*
It's important to note that before this increase, Broadcom's stock had been under pressure. Since the beginning of 2025, the stock had fallen by approximately 30%, driven by concerns about potential regulatory changes related to President Donald Trump's trade policy.* However, strong quarterly results showed that Broadcom has the potential to reverse this correction, which investors can take advantage of.
Conclusion
Broadcom's Q1 2025 results demonstrated that the company has stable foundations for continued growth. The strong performance of the AI segment and the expanding software division ensure diversified revenue streams. While the company's stock faced pressure in recent months, the latest numbers show that Broadcom continues to maintain its position as a leader in semiconductor and software solutions. [2]
* Historical data is not a guarantee of future performance.
[1], [2] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements are not guarantees of future performance. Forward-looking statements by their nature involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.
Caution! This marketing material is not and should not be construed as investment advice. Historical data is not a guarantee of future performance. Investing in foreign currencies may affect returns due to fluctuations. All securities transactions may result in both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
Sources:
https://www.cnbc.com/2025/03/06/broadcom-avgo-earnings-report-q1-2025-.html
https://investors.broadcom.com/static-files/602c2fd3-89a0-436f-b638-4890f20feda7
