Broadcom Inc

Broadcom is one of the largest semiconductor companies in the world and has also expanded into infrastructure software. Its semiconductors primarily serve computing, wired connectivity, and wireless connectivity. It is primarily a fabless designer but holds some manufacturing in-house, such as for its best-of-breed film bulk acoustic resonator filters that sell into the Apple iPhone. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments. Broadcom is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as VMware, Brocade, CA Technologies, and Symantec in software.

Sentiment Score: +14

Sentiment Change: +17

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Broadcom Inc Earnings - Q3 2025 Analysis & Highlights

Key Takeaways

Broadcom's Q4 2025 earnings call highlighted record revenue driven by AI semiconductors and VMware, strong growth in AI revenue, and significant customer orders for AI infrastructure. The company anticipates continued AI revenue acceleration and stability in non-AI semiconductor revenue for fiscal year 2026.

Key Financial Results

Q4 2025 total revenue: Record $18 billion, up 28% year-on-year, exceeding guidance due to strong AI semiconductor and infrastructure software growth.

Q4 consolidated adjusted EBITDA: Record $12.12 billion, up 34% year-on-year.

Fiscal year 2025 consolidated revenue: Record $64 billion, up 24% year-over-year.

Fiscal year 2025 adjusted EBITDA: $43 billion, representing 67% of revenue.

Free cash flow: Grew 39% year-on-year to $26.9 billion for fiscal year 2025.

Q1 2026 (Guidance): Expected revenue of approximately $19.1 billion, up 28% year-on-year, with adjusted EBITDA around 67% of revenue.

Business Segment Results

Semiconductors (Q4 2025): Revenue of $11.1 billion, a 35% year-on-year increase, driven by AI.

AI Semiconductor Revenue (Q4 2025): $6.5 billion, up 74% year-on-year.

Non-AI Semiconductors (Q4 2025): Revenue of $4.6 billion, up 2% year-on-year.

Infrastructure Software (Q4 2025): Revenue of $6.9 billion, up 19% year-on-year, exceeding the outlook of $6.7 billion.

Infrastructure Software (Fiscal Year 2025): Revenue of $27 billion, up 26% year-on-year.

Capital Allocation

Dividends: Increased quarterly common stock cash dividend in Q1 fiscal 2026 to $0.65 per share, a 10% increase from the prior quarter.

Fiscal 2026 Annual Dividend: Expected to be a record $2.60 per share, a 10% year-on-year increase.

Share Repurchase Program: Extended with $7.5 billion remaining through the end of calendar year 2026.

Q4 2025 Dividends: Paid stockholders $2.8 billion in cash dividends.

Fiscal 2025 Shareholder Returns: Returned $17.5 billion of cash to shareholders, including $11.1 billion in dividends and $6.4 billion in share repurchases and eliminations.

Industry Trends and Dynamics

AI Spending Momentum: Customer spending momentum in AI is expected to continue accelerating in 2026.

AI Networking Demand: Demand for AI networking is strong as customers build data center infrastructure ahead of deploying AI accelerators.

Custom AI Accelerators (XPUs): Increasing adoption of XPUs for training LLMs and monetizing platforms through inferencing APIs and applications.

TPUs Extended Externally: TPUs used in creating Gemini are also being used for AI cloud computing by other companies.

Competitive Landscape

Tomahawk 6 Switch: The latest 102-terabit per second Tomahawk 6 switch is the first and only one of its capability.

Customer Tooling: The concept of customer tooling is considered an overblown hypothesis.

Competition in Silicon: The technology in silicon keeps updating and evolving.

Growth Opportunities and Strategies

AI Revenue Growth: Expects AI revenue to continue to accelerate and drive most of the company's growth.

VMware Growth: Infrastructure software revenue will continue to be driven by VMware growth at low-double digits.

AI System Sales: Selling AI systems with key components and being fully responsible for the entire system or rack.

Advanced Packaging: Building a facility in Singapore for advanced packaging to address supply chain security and delivery.

Financial Guidance and Outlook

Q1 2026 Revenue: Expect consolidated revenue of approximately $19.1 billion, up 28% year-on-year.

Q1 2026 Adjusted EBITDA: Expect adjusted EBITDA to be approximately 67% of revenue.

Fiscal Year 2026 Infrastructure Software Revenue: Expect infrastructure software revenue to grow low-double-digits percentage.

Q1 2026 AI Revenue: Expect AI revenue to double year-on-year to $8.2 billion.

Q1 2026 Non-AI Semiconductor Revenue: Forecast non-AI semiconductor revenue to be approximately $4.1 billion, flat from a year ago.

Q1 2026 Infrastructure Software Revenue: Forecast infrastructure software revenue to be approximately $6.8 billion.

Q1 2026 Gross Margin: Expect consolidated gross margin to be down approximately 100 basis points sequentially, primarily reflecting a higher mix of AI revenue.

Tax Rate: The non-GAAP tax rate for Q1 and fiscal year 2026 is expected to increase from 14% to approximately 16.5% due to the impact of the global minimum tax and shift in geographic mix of income compared to that of fiscal year 2025.