Broadcom (NASDAQ:AVGO) Posts Impressive Third Quarter, Stock Levels Improve

Fabless chip and software maker Broadcom (NASDAQ:AVGO) reported third-quarter 2025 results that beat the market’s revenue expectations, with revenue up 28.2% year over year to $18.02 billion. Moreover, revenue expectations for the next quarter ($19.1 billion at the midpoint) were surprisingly good and 4.4% higher than what analysts expected. Non-GAAP earnings of $1.95 per share were 4.3% above analyst consensus estimates.

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Gain: $18.02 billion vs. analyst estimates of $17.49 billion (28.2% YoY growth, 3% better)
Custom EPS: $1.95 vs. analyst estimates of $1.87 (4.3% better)
Adjusted EBITDA: $12.22 billion vs. analyst estimates of $11.64 billion (67.8% margin, 5% profit)
Revenue guidance for Q4 CY2025 is in the middle at $19.1 billion, above analyst estimates of $18.29 billion
Operating margin: 41.7%, compared to 32.9% in the same quarter last year
Free cash flow margin: 41.4%, compared to 39% in the same quarter last year
Days of inventory outstanding: 36, compared to 54 in the previous quarter
Market capitalization: $1.95 trillion

“In the fourth quarter, record revenue of $18.0 billion grew 28% year-over-year, led by a 74% year-over-year increase in AI semiconductor revenues,” said Hock Tan, president and CEO of Broadcom Inc.

Broadcom (NASDAQ:AVGO), originally the semiconductor division of Hewlett Packard, is a semiconductor conglomerate that includes wireless communications, networking and data storage, as well as infrastructure software focused on mainframes and cybersecurity.

Assessing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but the best performers can continue to grow for years to come. Fortunately, Broadcom’s 21.7% annualized revenue growth over the past five years has been exceptional. Its growth exceeded that of the average semiconductor company and shows that its offering is resonating with customers, which is a good starting point for our analysis. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth followed by periods of revenue contraction (which can sometimes provide favorable times to buy).

Broadcom quarterly revenue

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s successful product obsolete today. Broadcom’s annualized revenue growth of 33.6% over the past two years is above the five-year trend, indicating that demand has been strong and has increased recently.

This quarter, Broadcom reported robust year-over-year revenue growth of 28.2%, and revenue of $18.02 billion exceeded Wall Street estimates by 3%. The company’s management is currently targeting a 28.1% year-over-year revenue increase in the next quarter.

Looking further ahead, sell-side analysts expect revenue to grow by 37.4% over the next twelve months, an improvement on the past two years. This projection is notable for a company of this size and suggests that the newer products and services will lead to better revenue performance.

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Days Inventory Outstanding (DIO) is an important metric for chip makers because it reflects a company’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chip makers to exercise pricing power. A steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to cut production.

This quarter, Broadcom’s DIO came in at 36, which is 26 days below the five-year average. At this time, these figures do not indicate excessive inventory build-up.

We were impressed by Broadcom’s sales growth and strong improvement in inventory levels. We were also pleased that next quarter revenue expectations exceeded Wall Street expectations. Zooming out, we think this was a good print with some key positives. The stock rose 3.1% to $418.84 immediately after the report.

Broadcom had an encouraging quarter, but one earnings result doesn’t necessarily mean the stock is a buy. Let’s see if this is a good investment. What happened in the last quarter matters, but not as much as business quality and longer-term valuation, when deciding whether to invest in this stock. We cover that in our useful full research report which you can read here. It’s free for active Edge members.