Broadcom’s next-quarter outlook is optimistic, but an elevated valuation may cap share growth

Broadcom’s revenue for Q2 2025 exceeded expectations, and the forecast for the next quarter remains strong. Nevertheless, the company’s high valuation is prompting investor caution, which could lead to a decline in AVGO shares to 215 USD.

Broadcom (NASDAQ: AVGO) reported record revenue for the Q2 2025 financial year, reaching 15 billion USD, representing a 20% increase compared to the same period last year. Adjusted net profit stood at 7.8 billion USD (1.58 USD per share), slightly ahead of analysts’ expectations. Revenue from the company’s AI-related segment increased to 4.4 billion USD, up 46%, driven by strong demand for custom AI and networking chips, with a projected rise to 5.1 billion USD in the next quarter. The infrastructure software segment, including VMware, also delivered robust performance, with revenue rising by approximately 25%.

Despite strong results and a positive forecast, Broadcom shares fell by 5% following the report, as investors remain cautious in light of the company’s high valuation and concerns over the sustainability of its growth.

This article examines Broadcom Inc., breaks down its revenue streams, reviews its Q1 2025 performance, and outlines expectations for 2025. A technical analysis of AVGO is also provided, forming the basis for the 2025 Broadcom stock forecast.

About Broadcom Inc.

Broadcom Inc. is a US-based technology company specialising in developing chips for networking equipment, servers, data centres, wireless communications, and software for cloud and enterprise solutions. Founded in 1961 as a division of HP, it was spun off as Avago Technologies in 1991. In 2009, Avago Technologies went public on NASDAQ, and its shares have been traded under the ticker AVGO ever since. In 2016, Avago Technologies acquired Broadcom Corporation for 37.0 billion USD and adopted its name.

Broadcom Inc.’s main revenue streams

Broadcom’s revenue is divided into two main segments:

1. Semiconductor business – Approximately 75% of revenue is derived from the sale of chips for data centres, cloud computing, AI accelerators, network processors, and chips for servers, storage, networking equipment, and wireless modules for smartphones and Wi-Fi.
2. Infrastructure software – The remaining 25% of revenue comes from enterprise software for cloud computing, cybersecurity and networking solutions, VMware products, automation components, and DevOps platforms.

Broadcom Inc. Q1 FY2025 earnings report

On 6 March, Broadcom released its Q1 2025 financial results for the period ended 2 February 2025. The key figures are as follows:

• Revenue: 14.9 billion USD (+25%)
• Net profit: 7.8 billion USD (+67%)
• Earnings per share (EPS): 1.60 USD (+307%)
• Operating profit: 6.2 billion USD (+198%)

Net revenue by segment:

• Semiconductor solutions: 8.2 billion USD (+55%)
• Infrastructure software: 6.7 billion USD (+47%)

Broadcom reported strong financial results for Q1 of FY2025, with revenue rising by 25% year-on-year. This growth was primarily driven by a 77% increase in AI-related revenue, which reached 4.1 billion USD, and a 47% rise in infrastructure software revenue, totalling 6.7 billion USD. The successful integration of VMware, acquired in 2023, also played a significant role in this expansion, strengthening Broadcom’s position in the enterprise software market.

CEO Hock Tan highlighted the strong demand for custom AI chips from cloud computing giants, which heavily invest in AI-driven data centres.

Looking ahead to Q2 2025, Broadcom expects revenue to reach 14.9 billion USD, slightly above analysts’ estimates. The company anticipates further growth in the AI semiconductor segment, with AI-related revenue projected to increase to 4.4 billion USD in the next quarter.

Broadcom Inc. Q2 2025 report

• Revenue: 15.0 billion USD (+20%)
• Net income: 7.8 billion USD (+44%)
• Earnings per share (EPS): 1.58 USD (+43%)
• Operating profit: 5.8 billion USD (+96%)

Net revenue by segment:

• Semiconductor solutions: 8.4 billion USD (+17%)
• Infrastructure software: 6.6 billion USD (+25%)

Broadcom’s Q2 fiscal 2025 report painted a strong picture for investors, highlighting the company’s solid position in the AI and semiconductor sectors. Revenue rose by 20% from last year, largely driven by a rapid 46% increase in AI income to 4.4 billion USD. This growth reinforces Broadcom’s pivotal role as a supplier of custom AI chips and networking solutions to major companies, such as Google, Meta, and ByteDance.

In Q2 fiscal 2025, the company repurchased shares worth 3.2 billion USD, indicating confidence in the long-term value of the business and its ability to generate stable cash flow.

Broadcom issued an optimistic outlook for Q3, anticipating revenue of 15.8 billion USD, slightly above Wall Street’s expectations. CEO Hock Tan emphasised that AI semiconductor revenue would increase to 5.1 billion USD next quarter, marking the tenth consecutive quarter of growth. This guidance reflects the company’s confidence in sustained demand for its AI and networking products, including the recently unveiled Tomahawk 6 switch, which enhances network performance and efficiency for AI workloads.

Despite strong financial results and a positive outlook, Broadcom’s shares fell by 5% following the release of the report. Market participants are concerned about a potential slowdown in the AI market, which could lead the company to miss its targets. In addition, Broadcom’s stock price has surged by 92% in the last two months, highlighting a high valuation that may be difficult to sustain amid trade restrictions. Nevertheless, analysts remain optimistic about the company’s future. For instance, Japanese investment banking and securities firm Mizuho Securities named Broadcom one of the best semiconductor stocks, citing its high profitability and strong free cash flow, supported by AI trends.

Overall, Broadcom’s Q2 2025 report confirms its strategic leadership in the AI and semiconductor sector, with continued investment in AI technology, robust relationships with key clients, and a positive outlook, making the company’s shares an attractive investment.

Expert forecasts for Broadcom Inc. stock

• Barchart: 31 out of 35 analysts rated Broadcom stock as a Strong Buy, one as Buy, and three as Hold. The highest target price is 301 USD
• MarketBeat: 27 out of 29 experts gave a Buy rating to the shares, while two recommended Hold. The highest target price is 340 USD
• TipRanks: 27 out of 28 respondents recommended the stock as a Buy, and one as a Hold. The highest target price is 340 USD
• Stock Analysis: 11 out of 29 experts rated the shares as a Strong Buy, 14 as Buy, and one as Hold. The highest target price is 340 USD

Broadcom Inc. stock price forecast for 2025

Broadcom shares are trading within an ascending channel, and ahead of the Q2 fiscal 2025 report, the price approached the channel’s upper boundary, which serves as resistance. However, a negative reaction from investors drove the price lower, with Broadcom stock falling below the 250 USD resistance level, thereby confirming a false breakout. Based on Broadcom’s stock performance, potential price movements in 2025 are as follows:

The baseline forecast for Broadcom Inc.’s stock suggests a corrective decline in the AVGO price to the 215 USD support level. A rebound from this level would drive a recovery towards the channel’s upper boundary at 280 USD. Subsequently, the share price could rise to 300 USD.

The alternative forecast for Broadcom Inc.’s shares anticipates a break below the 215 USD support level, triggering a decline towards 185 USD. A rebound from this level would signal the end of the correction and a resumption of AVGO’s upward trajectory within the ascending channel. In this case, the upside target would remain the channel’s upper boundary near 300 USD.

Risks of investing in Broadcom Inc. stock

When investing in Broadcom’s stock, it is essential to consider the risks the company may face. Below are the key events that could negatively impact Broadcom’s revenue:

• A slowdown in artificial intelligence spending: as AI is a key growth driver, any reduction in spending due to market saturation, an economic downturn, or shifting priorities could directly affect semiconductor revenue. Although investor expectations for AI-related growth are high, slower-than-expected progress could undermine investor confidence and earnings forecasts
• Dependence on key clients: CEO Hock Tan has mentioned three major cloud clients developing their own AI chips. If these companies succeed, their reduced reliance on Broadcom could harm the profitability of its semiconductor segment
• Geopolitical and trade risks: Broadcom is exposed to risks from escalating trade tensions between the US and China. Potential tariffs under the Trump administration or export restrictions on AI chips to China could disrupt supply chains or limit access to traditional markets
• Competition in the semiconductor sector: Broadcom faces competitive pressures from companies like AMD and NVIDIA in the AI and networking solutions space. NVIDIA’s dominance in AI GPUs and the potential revival of Intel (with Broadcom reportedly interested in its chip business) could reduce Broadcom’s market share