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Broadcom (NASDAQ: AVGO) will report its Q2 FY25 earnings report on Thursday, June 5, after the market closes. Expectations are that the semiconductor titan will deliver robust performance results. Due to its dominance in AI chip technology and a strong software division, Broadcom is playing a significant role in the AI revolution.
Earnings Outlook and Estimates
- Earnings Per Share: $1.57
- Revenue: $14.9 billion
This follows Q1’s record $14.9B in revenue, driven by a 77% surge in AI-related sales to $4.1B. Broadcom has consistently beaten analysts’ expectations for over three years. ⁽¹⁾
Broadcom is up 85% YTD and could be on its way to reaching a new all-time high. Much of those gains have come in the past two months, with shares climbing on the back of demand for semiconductors and on investors’ enthusiasm for AI infrastructure. ⁽²⁾
Segment Revenue Breakdown
AI Segment
Broadcom’s dominance in AI is one of the main factors in its Q2 earnings. AI revenue is expected to come in at $4.4 billion, a 44% YoY increase as the chipmaker rides the wave of high demand from hyperscaler giants such as AWS, Microsoft, Meta, and Google.
Its innovation in 3.5D chip packaging and co-packaged optics has given Broadcom a competitive advantage in a highly competitive industry. ⁽³⁾
Semiconductor and Infrastructure
Semiconductor revenues are expected to reach $8.4 billion, while Infrastructure Software revenues are projected to grow 23% year-over-year to $6.5 billion. ⁽⁴⁾
Networking Segment
Revenue from the Networking segment, which includes switches and routers, is expected to be flat YoY. Broadband revenues are expected to rise as service providers and telecommunications spending are rising. Broadcom’s share of the $12B data center switch market is nearing 60%, thanks to its silicon photonics and CPO integration. ⁽⁵⁾
VMware Integration
VMware integration, which refers to connecting VMware virtual infrastructure with other systems and applications, is expected to contribute $6.5 billion in revenue in Q2, reflecting growth of 23% year-over-year in the infrastructure software segment. ⁽⁶⁾
Company Highlights
Broadcom’s acquisition of VMware has benefited Infrastructure software solutions. Since the acquisition, Broadcom has added more than 70% of its largest 10,000 customers to VMware, which enables enterprises to deploy private cloud environments on-premises. ⁽⁷⁾
Broadcom also announced an upgrade to its VMware Tanzu CloudHealth platform, launching a new AI-powered user experience designed to enhance cloud financial operations (FinOps).
Key Factors to Watch
- AI Chip Client Updates
Details on new or existing hyperscalers clients such as Google, Meta, Microsoft, AWS or more)
- Tariff Impacts on Semiconductors
Investors expect comments on tariff impacts on the overall semiconductor industry.
- VMware Integration Performance
Updates on the process of this integration and its impact on Broadcom’s recurring revenue model could move the stock.
- Debt and Cash Flow
Updates on Broadcom’s $66 billion free cash flow and long-term debt will be monitored by investors.
- Macro Environment Commentary
Investors will be watching for updates on geopolitical concerns affecting the software and semiconductor industry, as well as supply and demand trends.
- Guidance for Future Quarters
Management will likely talk about Q3 2025 guidance and long-term AI revenue projections, previously set at $60–90 billion by 2027. Future guidance could lead to volatility in the stock price.
Conclusion
Broadcom’s upcoming Q2 FY25 earnings report is highly anticipated, with strong expectations fueled by its leadership in AI chip technology, continued growth in infrastructure software, and successful VMware integration.
Investors are closely monitoring Broadcom’s position in the AI industry. The company supplies essential components for AI infrastructure, and expectations are rising that its results will reflect that demand. Analysts remain bullish heading into earnings; recent strength in the broader semiconductor sector has only added fuel to the rally.
