Broadcom (AVGO) delivered record-breaking results in fiscal Q2 2025, showcasing the company’s exceptional execution and leadership in AI and infrastructure software. Total revenue surged 20% year-over-year (YoY) to $15.0 billion, driven by sustained demand for AI semiconductor solutions and the robust performance of its software segment, notably VMware. Profitability soared, with GAAP net income rising 134% YoY to $4.97 billion and non-GAAP net income up 44% YoY to $7.79 billion. Adjusted EBITDA climbed 35% to $10.0 billion, representing an impressive 67% of revenue, while free cash flow reached $6.41 billion, up 44% YoY.

The Semiconductor Solutions segment accounted for $8.41 billion, or 56% of total revenue, reflecting 17% YoY growth. AI remained the key driver, generating over $4.4 billion, up 46% YoY, and now representing 52% of semiconductor revenue. Within AI, Ethernet-based networking exploded with 170%+ growth, making up 40% of AI revenue, while custom AI accelerators (XPUs) also posted strong double-digit growth. Meanwhile, non-AI semiconductor revenue declined 5% YoY, but showed sequential improvements in broadband and enterprise networking.

The Infrastructure Software segment delivered $6.60 billion, up 25% YoY, fueled by growing adoption of VMware Cloud Foundation (VCF), now used by 87% of Broadcom’s top 10,000 customers. This transition to subscriptions drove double-digit annual recurring revenue (ARR) growth and significantly boosted margins. Segment-level profitability was strong, with gross margin rising to 93% and operating margin jumping to 76%, up 33 percentage points YoY.

Company-wide, Broadcom posted a consolidated gross margin of 79.4% and operating income of $9.8 billion (a 37% YoY increase), despite investing $1.5 billion in R&D. Shareholder returns remained a priority, with $2.8 billion paid in dividends and $4.2 billion spent on repurchasing 25.3 million shares.

Looking ahead, management guided for another strong quarter, projecting Q3 revenue of approximately $15.8 billion, with AI semiconductor sales expected to jump 60% YoY to $5.1 billion. While gross margins may dip by ~130 basis points due to a higher mix of lower-margin XPUs, the company still expects an adjusted EBITDA margin of at least 66%.

Management remains highly optimistic, reaffirming that Broadcom’s AI momentum—now in its ninth consecutive quarter of growth—is likely to persist into fiscal 2026, driven by both training and inference demand from hyperscale customers. With $9.47 billion in cash, disciplined capital allocation, and industry-leading margins, Broadcom is well-positioned to maintain its growth trajectory while continuing to return value to shareholders and invest strategically in future opportunities.