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Date

September 8, 2025

Category

Market Insights

Broadcom Sees AI Revenue Jump 63% in Q3

Your capital is at risk if you invest. You could lose all your investment.

There are few companies that have benefited from the global AI infrastructure build out more than Broadcom. A semiconductor and networking powerhouse, it has generated huge revenue growth over the last three years.

Recently, Broadcom posted its earnings for the third quarter of its fiscal 2025 year and they showed that AI growth remains very strong. Here’s a look at some highlights from the report and the earnings call, and analysts’ reactions to the results.

AI Fuels Revenue and Earnings Growth

For Q3, Broadcom’s revenue amounted to $15.95 billion versus $15.82 billion expected. This represented year-on-year growth of 22%1.

Breaking this down, semiconductor solutions revenue was up 57% to $9.2 billion with AI revenue up 63% to $5.2 billion. Meanwhile, revenue from the company’s infrastructure software business – which includes VMWare – was $6.8 billion, up 43% year on year.

In terms of profitability, non-GAAP net income for the quarter was $8.4 billion while non-GAAP diluted earnings per share (EPS) was $1.69 versus $1.24 a year earlier. Analysts had been expecting EPS of $1.66.

Free cash flow for the period was $7.0 billion. This was a significant increase from the figure of $4.8 billion posted a year earlier.

Strong Q4 Guidance

Looking ahead, guidance was strong. For the fourth quarter of fiscal year 2025 the company expects revenue of approximately $17.4 billion, an increase of 24% from the prior-year period. AI semiconductor revenue is expected to climb to $6.2 billion in Q4, representing eleven consecutive quarters of growth.

Earnings Call Highlights

While the numbers from the earnings report were impressive, it was the earnings call that got investors excited. Because on the call, President and CEO Hock Tan advised that the company has acquired a new customer for its custom chips (XPUs). This customer has put in $10 billion worth of orders recently. And Tan said that these will start to be shipped in 2026. Note that Broadcom already has three customers for its XPUs. These are believed to be Alphabet, Meta, and TikTok owner ByteDance.

As a result of this new customer, and increasing volumes from its other three XPU customers, the company now expects the outlook for fiscal 2026 AI revenue to be significantly higher than previously indicated. According to Tan, it is likely to grow by more than 60% year on year.

Looking further out, Tan said that he believes that in the future, XPU share at these customers could be bigger than GPU share. In other words, the demand for custom, specialized chips may eventually outstrip the demand for general-purpose GPUs designed by the likes of Nvidia and AMD.

It’s worth noting that on the call, Tan also said that he would continue as CEO of Broadcom through at least 2030. “These are exciting times for Broadcom, and I’m very enthusiastic to continue to drive value for our shareholders,” he said.

Wall Street is Bullish on AVGO

Since the earnings, a number of Wall Street firms have increased their price target for AVGO stock2. These include Bernstein, JP Morgan, Morgan Stanley, and Piper Sandler, who all have targets above $370.

Given this bullish analyst sentiment, this is an AI stock to keep an eye on. Right now, it has strong momentum.

Footnotes:

1 Broadcom Inc. Announces Third Quarter Fiscal Year 2025 Financial Results and Quarterly Dividend, as of September 4, 2025
2 Investing.com, Broadcom (AVGO) Stock Forecast & Price Target, as of September 5, 2025

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