To The Moon

$Broadcom(AVGO)$ is scheduled to announce its fiscal Q2 2025 earnings on Thursday, June 5, 2025, after the market closes.

Consensus EPS: Analysts generally expect Broadcom to report a profit of approximately $1.57 per share for Q2 2025. This would represent a significant increase (around 54%) from the $1.10 per share reported in the year-ago quarter.

Consensus Revenue: The consensus revenue forecast for Q2 2025 is around $14.9 billion. This would be a 19% increase year-over-year.

AI Semiconductor Revenue: Broadcom itself has guided for AI semiconductor revenue to reach $4.4 billion in Q2, an increase of 44% year-over-year.

Infrastructure Software Revenue: The company expects infrastructure software revenue to be around $6.5 billion in Q2, up 23% year-over-year.

Adjusted EBITDA: Broadcom expects Q2 Adjusted EBITDA to be approximately 66% of projected revenue.

Broadcom (AVGO) Last Positive Earnings Call Saw Share Price Increase 33.83% Significantly

Broadcom had a positive earnings call on 06 March 2025 which saw its share price gained significantly by 33.83%.

The earnings call demonstrated strong financial performance and growth in AI and infrastructure software segments, driven by significant AI revenue growth and strategic R&D investments. However, challenges remain in the non-AI semiconductor sector with slow recovery and seasonal declines. Overall, the positive aspects of AI and software growth outweigh the negatives in non-AI areas.

Broadcom (AVGO) Guidance

During the Broadcom Inc. first quarter fiscal year 2025 earnings call, the company reported a record total revenue of $14.9 billion, up 25% year over year, and consolidated adjusted EBITDA of $10.1 billion, up 41% year over year. Specifically, semiconductor revenue reached $8.2 billion, a growth of 11% year over year, driven by a significant 77% increase in AI revenue, which amounted to $4.1 billion. The company provided guidance for the second quarter, expecting AI revenue to grow to $4.4 billion, representing a 44% increase year on year. Total semiconductor revenue is projected to rise by 2% sequentially and 17% year over year to $8.4 billion.

In the infrastructure software segment, Q1 revenue was $6.7 billion, marking a 47% increase year over year, and the company expects Q2 infrastructure software revenue to be approximately $6.5 billion, up 23% year on year. Overall, Broadcom is guiding Q2 consolidated revenue to approximately $14.9 billion, with an anticipated adjusted EBITDA margin of 66%.

Key Factors to Watch (based on company outlook)

Total revenue for Q1 FY2025 was a record $14.9 billion, up 25% year on year, and consolidated adjusted EBITDA was $10.1 billion, up 41% year on year.

AI Growth: Broadcom's AI semiconductor solutions have been a major growth driver. In Q1 2025, AI revenue surged 77% year-over-year to $4.1 billion, exceeding the company's own guidance. The continued strength in AI, particularly with hyperscale partners investing in AI XPUs and connectivity solutions for data centers, will be a critical focus for Q2. Expectations for Q2 AI revenue to grow to $4.4 billion, up 44% year on year.

VMware Integration and Infrastructure Software: The acquisition of VMware has significantly boosted Broadcom's infrastructure software segment. In Q1 2025, infrastructure software revenue grew 47% year-over-year to $6.7 billion, benefiting from the full impact of VMware. Investors will be looking for continued strong performance and signs of successful integration and cross-selling, especially with the shift to subscription-based revenue for VMware products.

Profitability and Margins: In Q1, Broadcom achieved a strong gross margin of 79.1% and an Adjusted EBITDA of 68% of revenue. Maintaining or improving these margins will be important, especially as the company continues to invest in R&D for leading-edge AI semiconductors.

Free Cash Flow and Shareholder Returns: Broadcom generated $6.0 billion in free cash flow in Q1. The company recently announced a new $10 billion share repurchase program through December 2025, indicating a commitment to returning capital to shareholders. Investors will look at cash flow generation and how it's being deployed.

Non-AI Semiconductor Performance: While AI is a significant tailwind, the performance of Broadcom's non-AI semiconductor business (which saw a sequential decline in Q1) will also be under scrutiny. Trends in enterprise networking, wireless, and industrial segments will be important.

Non-AI semiconductor revenue was down 9% sequentially due to a seasonal decline in wireless, and the recovery continues to be slow in certain segments like server storage and enterprise networking.

Resales in industrial were down double digits in Q1 and are expected to be down in Q2. While Broadcom has four new potential AI partners, these are not yet considered customers and will not contribute to the estimated SAM of $60 to $90 billion by 2027.

Broadcom (AVGO) Price Target

Based on 36 analysts from Tiger Brokers offering 12 month price targets for Broadcom in the last 3 months. The average price target is $238.26 with a high forecast of $301.15 and a low forecast of $171.60. The average price target represents a -0.49% change from the last price of $239.43.

Technical Analysis - Exponential Moving Average (EMA)

The strong Q1 performance, driven by AI and infrastructure software, set a positive tone for Q2.We can see that the RSI momentum is showing strong positive signal, though it was consolidating for past two weeks, but the bulls are making a daily uptrend successfully.

We should be seeing some strong push with $NVIDIA(NVDA)$ reported incredible demand from the AI, and I think the bulls would be pushing for a daily uptrend continuation next week before the earnings.

I am expecting an earnings surprise on top of the AI demand for Broadcom semiconductor solutions and I will be considering to add slowly.

Summary

When Broadcom releases its fiscal Q2 2025 earnings on 05 June, the market will be keenly watching whether the company meets or exceeds these analyst expectations, particularly regarding the continued acceleration of its AI-driven semiconductor business and the successful integration and growth of its infrastructure software segment. Any updates on future guidance will also be critical for investor sentiment.

Appreciate if you could share your thoughts in the comment section whether you think Broadcom would provide an earnings surprise with strong AI demand expectations for fiscal FY 2025.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.