The chart below shows how AVGO performed 10 days before and after its earnings report, based on data from the past quarters. Typically, AVGO sees a -1.08% change in stock price 10 days leading up to the earnings, and a +9.11% change 10 days following the report. On the earnings day itself, the stock moves by +0.46%. This data can give you a slight idea of what to expect for the next quarter's release.
Positive
Record Revenue Achievement: Broadcom reported a record total revenue of $14.9 billion for Q1 2025, up 25% year on year.
Record EBITDA Growth: Consolidated adjusted EBITDA reached a record $10.1 billion, reflecting a 41% year-on-year increase.
AI Revenue Surge: AI revenue surged to $4.1 billion, marking a 77% year-on-year growth, with expectations to grow to $4.4 billion in Q2 2025.
Semiconductor Revenue Surge: The semiconductor solutions segment generated $8.2 billion in revenue, up 11% year on year, driven by strong AI demand.
Infrastructure Software Revenue Surge: Infrastructure software revenue was $6.7 billion, up 47% year on year, supported by the integration of VMware and a shift to subscription models.
Gross Margin Improvement: Gross margin improved to 79.1% of revenue, exceeding initial guidance due to a favorable revenue mix.
Operating Income Surge: Operating income increased to $9.8 billion, up 44% year on year, with an operating margin of 66% of revenue.
Strong Cash Generation: Free cash flow for the quarter was $6 billion, representing 40% of revenue, demonstrating strong cash generation capabilities.
AI Investment Commitment: Broadcom is increasing R&D investments in AI, indicating a commitment to innovation and future growth in this sector.
Negative
Non-AI Semiconductor Revenue Decline: Non-AI semiconductor revenue declined 9% sequentially, indicating a seasonal decline in wireless and a slow recovery in the non-AI semiconductor market.
Wireless Revenue Outlook: Wireless revenue is expected to remain flat year on year in Q2, suggesting ongoing challenges in this segment.
Industrial Sector Resale Decline: Resales in the industrial sector were down double digits in Q1 and are expected to decline further in Q2, indicating weakness in this market.
Non-AI Semiconductor Recovery: The overall recovery in non-AI semiconductors is described as slow, which may impact future growth prospects for the company.
AI Revenue vs. Semiconductor Concerns: Despite strong growth in AI revenue, the non-AI semiconductor segment's performance is a concern, with expectations of flat revenue in Q2.
Gross Margin Outlook: The company anticipates a slight decrease in consolidated gross margin in Q2 due to the revenue mix, which could affect profitability.
Cash Flow Impact Analysis: Free cash flow as a percentage of revenue is being impacted by cash interest expenses related to debt from the VMware acquisition, which may limit financial flexibility.
Broadcom Inc. (NASDAQ:AVGO) Q1 2025 Earnings Call Transcript
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