Image: Broadcom’s shares have done quite well the past few years.
By Brian Nelson, CFA
On June 5, Broadcom (AVGO) reported second quarter fiscal 2025 results that came in better than expected on both the top and bottom lines. Revenue increased 20% from the same period a year ago, to $15 billion, while non-GAAP net income came in at $7.8 billion, up from $5.4 billion in the same period last year. Adjusted EBITDA of $10 billion was 67% of revenue and better than the $7.4 billion achieved in last year’s quarter. Non-GAAP diluted earnings per share was $1.58 for the second quarter versus $1.10 in last year’s quarter.
Management had the following to say about the quarter:
Broadcom achieved record second quarter revenue on continued momentum in AI semiconductor solutions and VMware. Q2 AI revenue grew 46% year-over-year to over $4.4 billion driven by robust demand for AI networking. We expect growth in AI semiconductor revenue to accelerate to $5.1 billion in Q3, delivering ten consecutive quarters of growth, as our hyperscale partners continue to invest.
Consolidated revenue grew 20% year-over-year to a record $15.0 billion. Adjusted EBITDA increased 35% year-over-year to $10.0 billion reflecting our strong business model. Free cash flow was a record $6.4 billion, up 44% year-over-year. Consistent with our commitment to return excess cash to shareholders, we returned $7.0 billion to shareholders in the second quarter through $2.8 billion of cash dividends and $4.2 billion of stock repurchases.
Broadcom’s cash from operations was $6.6 billion and capital spending was $144 million in the fiscal second quarter, resulting in free cash flow of $6.4 billion, or 43% of revenue. Looking to the third quarter of fiscal 2025 for the period ending August 3, Broadcom expects revenue of approximately $15.8 billion, above the consensus forecast of $15.77 billion at the time of the report, and third quarter adjusted EBITDA of at least 66% of projected revenue. Though we don’t include Broadcom in any newsletter portfolio, the company’s results support an outlook for continued strong AI demand growth. Shares yield 1% at the time of this writing.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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