Broadcom (NASDAQ: AVGO) posts $15bn Q2 FY25 revenue as AI and VMware drive 20% growth

Broadcom Inc. (NASDAQ: AVGO) delivered another impressive performance in the second quarter of fiscal year 2025, reaffirming its dominant role in both AI-driven semiconductor innovation and enterprise software through VMware. The company reported $15.004 billion in quarterly revenue, up 20 percent year-over-year, while posting a non-GAAP net income of $7.787 billion, a 44 percent rise compared to the same quarter last year. The momentum reflects broader sectoral trends in AI infrastructure spending and the ongoing enterprise shift toward hybrid cloud environments, with hyperscale and software markets both contributing to Broadcom’s strong top-line expansion.

How Did Broadcom Perform Financially in Q2 FY25?

Broadcom’s Q2 FY25 revenue rose from $12.487 billion a year ago to $15.004 billion, driven by significant growth in both of its business segments. Semiconductor solutions contributed $8.408 billion, a 17 percent increase from Q2 FY24, while infrastructure software revenue, bolstered by VMware, reached $6.596 billion, up 25 percent. This marks a clear evolution in Broadcom’s revenue mix, with software now accounting for 44 percent of total revenue—a signal of the company’s successful pivot to a more diversified, less cyclical model.

GAAP net income came in at $4.965 billion, more than doubling the prior year’s $2.121 billion. Non-GAAP diluted earnings per share rose from $1.10 to $1.58, while GAAP EPS reached $1.03. Adjusted EBITDA stood at $10.001 billion, or 67 percent of total revenue, up from $7.429 billion the year before.

What’s Driving Broadcom’s Explosive AI Chip Growth?

AI infrastructure remains the cornerstone of Broadcom’s growth engine. The company generated $4.4 billion in AI semiconductor revenue during the quarter, marking a 46 percent year-over-year increase. CEO Hock Tan confirmed that demand from hyperscalers remains strong and projected that Q3 AI semiconductor revenue would rise further to $5.1 billion. This would mark the company’s tenth consecutive quarter of AI growth, making Broadcom one of the most consistent suppliers of AI networking silicon in the market.

Broadcom’s strength lies in custom silicon, high-performance networking ASICs, and interconnect solutions that are critical to enabling large-scale AI workloads. As cloud providers like Amazon, Google, and Microsoft accelerate their AI investments, Broadcom has positioned itself as a preferred partner for the next wave of compute architecture.

Is the VMware Acquisition Delivering Results?

The contribution of VMware to Broadcom’s top and bottom lines was evident in Q2 FY25. Infrastructure software revenue jumped to $6.6 billion, accounting for nearly half of Broadcom’s business. The company is focused on integrating VMware’s portfolio of virtualization, DevOps, and hybrid cloud tools, while streamlining operations to improve margins. Management emphasized that the acquisition has added meaningful recurring revenue and enhanced Broadcom’s hybrid cloud offerings, allowing the company to play a central role in enterprise IT transformation.

Why Did Broadcom Stock Dip Despite Record Numbers?

Despite a strong earnings print, Broadcom’s stock declined by 0.44 percent on June 5, closing at $259.93. The slight drop, even amid record financial results, suggests that the performance had already been priced in by investors. Trading volume spiked to over 42 million shares—well above normal—indicating significant institutional repositioning. The stock continues to trade near its 52-week high of $265.43 and remains far above its 52-week low of $128.50, maintaining its leadership position in the AI and cloud infrastructure investment theme.

Institutional Sentiment: How Are Analysts and Funds Reacting?

Sentiment among institutional investors appears largely positive. Analysts have emphasized Broadcom’s consistent margin discipline, cash generation, and AI growth visibility as major strengths. The company returned $7 billion to shareholders this quarter through $2.8 billion in dividends and $4.2 billion in stock repurchases. Trading desks noted heightened options activity targeting $270–$275 strikes, indicating bullish sentiment among sophisticated investors expecting a post-dip rebound.

At a market capitalization of $1.23 trillion, the valuation remains elevated, but institutions appear comfortable given Broadcom’s 66–67 percent EBITDA margins and strong cash flow. The capital return program continues to make AVGO attractive to both income and growth investors.

Is Broadcom a Buy, Sell, or Hold After These Results?

Most analysts maintain a “Buy” or “Accumulate on Dips” view. With AI momentum accelerating, robust free cash flows, and nearly half of its revenue now coming from software, Broadcom offers exposure to both the hardware layer of AI compute and the enterprise IT stack through VMware. Risks remain—particularly around potential hyperscaler capex moderation or integration challenges with VMware—but the company’s execution, cash cushion, and capital allocation strategy continue to inspire confidence.

At its current price of $259.93, Broadcom trades at a forward EV/EBITDA multiple in the low-to-mid 20s. While that may seem high, the valuation is underpinned by operating leverage, recurring software revenue, and sector-wide AI demand tailwinds.

What Guidance Has Broadcom Issued for Q3 FY25?

Broadcom has guided to Q3 FY25 revenue of approximately $15.8 billion, representing 21 percent year-over-year growth. Adjusted EBITDA is expected to remain at or above 66 percent of revenue. No new M&A announcements were made, but analysts believe the company may consider bolt-on acquisitions in cybersecurity, observability, or AI-enabled DevOps software in the second half of FY25.

With $9.472 billion in cash and cash equivalents and disciplined capital expenditure levels, Broadcom remains financially equipped to pursue new opportunities without compromising shareholder returns.

A Balanced Bet on AI, Software, and Cash Flow Strength

Broadcom continues to set itself apart as one of the few large-cap technology companies capable of simultaneously scaling top-line growth and preserving industry-leading profitability. This balance is particularly evident in its dual-engine business model, which combines the cyclical but surging demand for AI semiconductors with the steadier, subscription-based revenue of enterprise infrastructure software. Few peers in the market are executing as effectively across both layers of the technology stack, especially during a period marked by macroeconomic uncertainty, rising capital costs, and shifting IT priorities.

The company’s focus on high-performance custom silicon, AI networking interconnects, and ASICs is providing it with a front-row seat in the global AI arms race. At the same time, the integration of VMware is creating an increasingly robust platform play in hybrid cloud orchestration and virtualization. These dynamics are giving Broadcom a critical role in enterprise data centers and hyperscale cloud architectures alike, allowing it to benefit from both capital expenditure cycles and recurring opex-driven cloud transformations. For investors seeking durable, infrastructure-centric exposure to AI, Broadcom offers more predictable economics than some of the more volatile GPU-first firms.

While short-term consolidation in AVGO’s share price may occur due to sector rotation, valuation re-rating, or profit-taking after a prolonged rally, the company’s fundamentals remain among the strongest in the technology sector. Broadcom is generating record free cash flow, converting over 40 percent of its revenue into discretionary capital, and returning billions to shareholders via a disciplined mix of dividends and share repurchases. This capital return story has become increasingly important for institutional allocators seeking not just growth, but also capital efficiency and downside protection in a higher-rate environment.

Moreover, Broadcom’s presence across mission-critical enterprise and cloud workloads places it in a structurally advantaged position as digital transformation budgets evolve in favor of operational efficiency, AI acceleration, and hybrid IT architectures. Its diversified exposure to networking, broadband, mainframe, cybersecurity, and storage further insulates it from demand volatility in any single vertical. And unlike many high-growth tech peers that remain reliant on equity dilution or external financing, Broadcom’s balance sheet and internal cash flows are sufficient to fund future M&A or organic R&D expansion without compromising shareholder value.

Looking ahead to the second half of FY25, Broadcom’s pipeline is expected to benefit from continued hyperscaler spending, increased AI model deployment, and cross-sell opportunities emerging from the VMware integration. The company’s near-term guidance appears achievable and conservative, which provides further upside risk in the event of continued AI infrastructure acceleration or new enterprise wins on the software side.

For institutional and long-term investors looking for reliable exposure to the backbone of AI infrastructure, cloud-native application stacks, and hybrid IT modernization, Broadcom remains a compelling name with a proven operating model, capital discipline, and expanding strategic relevance. Its ability to deliver growth, defend margins, and operate at the center of global IT architecture makes it a cornerstone holding in any portfolio oriented toward the future of intelligent infrastructure.