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%. Broadcom Inc. Price, Consensus and EPS Surprise Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote AVGO’s Top-Line Growth Rides on Strong AISemiconductor 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 DetailsThe 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 FlowAs 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 GuidanceFor 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 ConsiderCurrently, 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.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>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 Amphenol Corporation (APH): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Reddit Inc. (RDDT): Free Stock Analysis Report Astera Labs, Inc. (ALAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks