Broadcom AVGO reported first-quarter fiscal 2025 non-GAAP earnings of $1.60 per share, surpassing the Zacks Consensus Estimate by 6.67% and increasing 45.5% year over year.

AVGO’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 3.57%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net revenues increased 25% year over year to $14.9 billion, surpassing the Zacks Consensus Estimate by 2.03%. Broadcom's revenue growth in the first quarter of fiscal 2025 was driven by a surge in AI-related semiconductor revenues and the expansion of infrastructure software revenues.

AI revenues benefited from continued investments from hyperscale partners in AI XPUs and connectivity solutions for AI data centers.

AVGO shares jumped more than 12.82% in the after-hours trading to $202.45 following an optimistic second-quarter fiscal 2025 guidance.

AVGO’s Q1 Top-Line Details

Semiconductor solutions revenues (55% of net revenues) totaled $8.2 billion, rising 11% year over year and beating the Zacks Consensus Estimate by 0.56%. The uptick was driven by strong AI semiconductor revenues.

AI-related revenues grew 77% year over year to $4.1 billion, which was a major driver of overall revenue growth. This growth was driven by higher shipments of networking solutions to hyperscalers for AI applications.

Non-AI semiconductor revenues declined 9% sequentially to $4.1 billion.

Broadband revenues, which hit the lowest point in the previous quarter, experienced a strong double-digit sequential rebound in the reported quarter.

Server storage revenues declined in the single digits sequentially in the reported quarter.

Industrial resale revenues saw a double-digit decline in the first quarter of fiscal 2025.

Infrastructure software revenues (45% of net revenues) rose 47% year over year to $6.7 billion, bolstered by the acquisition of VMware and strong demand for infrastructure software solutions.

AVGO’s Operating Details

The non-GAAP gross margin was 79.1%, expanding 370 basis points (bps) year over year.

Research and development, as a percentage of net revenues, decreased 250 bps year over year to 9.6%. Selling, general and administrative expenses also decreased 260 bps to 3.6%.

Adjusted EBITDA increased 40.9% year over year to $10.1 billion. The adjusted EBITDA margin expanded 780 bps on a year-over-year basis to 67.6%.

The non-GAAP operating margin grew 880 bps year over year to 65.9%.

AVGO’s Balance Sheet & Cash Flow

As of Feb. 2, 2025, cash and cash equivalents were $9.31 billion compared with $9.35 billion as of Nov. 3, 2024.

Total debt (including the current portion of $5.65 billion) was $66.58 billion as of Feb. 2, 2025, compared with $67.57 billion as of Nov. 3, 2024.

Broadcom generated $6.11 billion in cash flow from operations compared with $5.60 billion in the previous quarter. The free cash flow was $6.01 billion compared with $5.48 billion in the prior quarter.

On Dec. 31, 2024, the company paid out a cash dividend of $0.59 per share of common stock, totaling $2.77 billion.

AVGO Provides Optimistic Q2 Guidance

For second-quarter fiscal 2025, Broadcom expects revenues of $14.9 billion, suggesting an increase of 19 percent from the prior-year period’s actual.

AI semiconductor revenues are projected to grow 44% year over year to $4.4 billion, whereas non-AI semiconductor revenues are expected to reach $4 billion.

Infrastructure Software revenues are expected to grow 23% year over year to $6.5 billion.

Semiconductor revenues are anticipated to grow 2% sequentially and 17% year over year to $8.4 billion.

Wireless revenues are expected to be flat year over year. Broadband revenues are expected to increase as service providers and telcos step up spending.

Industrial resale revenues are projected to decline 

Server storage revenues are projected to increase in the high-single digits sequentially.

Adjusted EBITDA is expected to be 66% of projected revenues.

The company anticipates the non-GAAP diluted share count to be 4.95 billion.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are Ballard Power Systems BLDP, RF Industries RFIL and Jabil JBL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ballard Power Systems shares have declined 27.7% year to date. BLDP is set to report fourth-quarter 2024 results on March 13.

RF Industries shares have returned 6.1% year to date. RFIL is set to report its first-quarter fiscal 2025 results on March 17.

Jabil shares have declined 4% year to date. JBL is set to report second-quarter fiscal 2025 results on March 20.

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