Fabless chip and software maker Broadcom (NASDAQ: AVGO) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 20.2% year on year to $15 billion. The company expects next quarter’s revenue to be around $15.8 billion, close to analysts’ estimates. Its non-GAAP profit of $1.58 per share was in line with analysts’ consensus estimates.
Is now the time to buy Broadcom? Find out by accessing our full research report, it’s free.
Broadcom (AVGO) Q1 CY2025 Highlights:
- Revenue: $15 billion vs analyst estimates of $15.02 billion (20.2% year-on-year growth, in line)
- Adjusted EPS: $1.58 vs analyst estimates of $1.57 (in line)
- Adjusted EBITDA: $10 billion vs analyst estimates of $9.93 billion (66.7% margin, 0.7% beat)
- Revenue Guidance for Q2 CY2025 is $15.8 billion at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 38.8%, up from 23.7% in the same quarter last year
- Free Cash Flow Margin: 42.7%, up from 35.6% in the same quarter last year
- Market Capitalization: $1.23 trillion
"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," said Hock Tan, President and CEO of
Company Overview
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Broadcom grew its sales at an incredible 20% compounded annual growth rate. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Broadcom’s annualized revenue growth of 27.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Broadcom’s year-on-year revenue growth of 20.2% was excellent, and its $15 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 20.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 17.3% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and indicates the market is baking in success for its products and services.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Broadcom’s DIO came in at NaN,
Key Takeaways from Broadcom’s Q1 Results
This was an in-line quarter, with revenue and EPS meeting expectations. Looking ahead, guidance for next quarter's revenue was also in line. The stock traded down 1.8% to $255.31 immediately after reporting.
So do we think Broadcom is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
