Broadcom, Inc., reported their first quarter fiscal year 2025 financial results, showcasing record-breaking revenue of $14.9 billion, a 25% increase year-over-year. The semiconductor business saw revenue of $8.2 billion, an 11% increase over the previous year, driven by growth in AI. The company beat AI revenue guidance due to strong shipments of networking solutions to hyperscalers for AI applications. Broadcom is heavily investing in next-generation AI accelerators and networking products to meet the demands of hyperscale customers.
The company reiterated its expectations for three hyperscale customers to generate a Serviceable Addressable Market (SAM) of $60 billion to $90 billion by fiscal 2027. Additionally, Broadcom is engaged with two other hyperscalers for custom AI accelerators and expects samples to be delivered soon. The company emphasizes collaboration between its hardware solutions and partners’ software expertise to optimize large language models for AI applications.
Non-AI semiconductor revenue showed slow recovery in Q1 with growth in broadband and server storage, offset by declines in industrial resales. Wireless revenue remained flat year-over-year. Broadcom expects non-AI semiconductor revenue to be flat sequentially in Q2, despite year-over-year growth in bookings. Infrastructure Software revenue increased 47% year-over-year in Q1, driven by the shift to subscription-based models and upselling to full-stack solutions, such as VMware Cloud Foundation (VCF) for private cloud environments.
Looking ahead, Broadcom forecasts Q2 consolidated revenue of $14.9 billion, with Semiconductor revenue expected to grow 17% year-over-year to $8.4 billion. AI revenue is projected to reach $4.4 billion, a 44% increase year-over-year. Infrastructure Software revenue is expected to be approximately $6.5 billion, up 23% year-over-year. The company aims for adjusted EBITDA to be around 66% of revenue in Q2.
In terms of R&D investments, Broadcom is focusing on developing leading-edge AI semiconductors and optimizing networking solutions for AI clusters. The company’s portfolio includes a wide range of connectivity products, with a focus on optical solutions to support the expansion of greenfield opportunities. While discussing potential mergers and acquisitions (M&A), Broadcom stated it is currently focused on AI and VMware initiatives and is not actively considering M&A opportunities.
Broadcom’s next earnings report is scheduled for June 5, 2025, where they will provide updates on their second quarter fiscal year 2025 performance. The company continues to drive innovation in AI and networking solutions, aiming to meet the evolving demands of hyperscale customers and solidify its position in the semiconductor industry.