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華爾街日報5 Insightful Analyst Questions From Broadcom’s Q3 Earnings Call
Broadcom’s third quarter results exceeded Wall Street’s expectations for both revenue and non-GAAP earnings, but the market reacted negatively to the print. Management attributed the quarter’s performance to accelerating demand for AI semiconductors and continued growth in its infrastructure software segment. CEO Hock Tan highlighted that AI semiconductor revenue rose sharply, supported by major orders for custom accelerators and AI data center components. He also noted, “We have never seen bookings of the nature that we have seen over the past three months.” Meanwhile, infrastructure software benefited from strong VMware Cloud Foundation adoption, driving robust contract bookings and expanding the company’s software backlog.
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Broadcom (AVGO) Q3 CY2025 Highlights:
- Revenue: $18.02 billion vs analyst estimates of $17.49 billion (28.2% year-on-year growth, 3% beat)
- Adjusted EPS: $1.95 vs analyst estimates of $1.87 (4.3% beat)
- Adjusted EBITDA: $12.22 billion vs analyst estimates of $11.64 billion (67.8% margin, 5% beat)
- Revenue Guidance for Q4 CY2025 is $19.1 billion at the midpoint, above analyst estimates of $18.29 billion
- Operating Margin: 41.7%, up from 32.9% in the same quarter last year
- Inventory Days Outstanding: 49, down from 54 in the previous quarter
- Market Capitalization: $1.54 trillion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Broadcom’s Q3 Earnings Call
- Vivek Arya (Bank of America): Asked about the sustainability and implications of the $73 billion AI backlog. CEO Hock Tan clarified that the figure is dynamic, with bookings accelerating, and emphasized that actual future shipments could be higher as more orders accumulate.
- Ross Seymore (Deutsche Bank): Queried whether Broadcom’s move to offer TPUs to external customers substitutes for or augments custom ASIC work. Tan responded that TPUs mostly substitute for merchant GPUs and that custom ASIC development remains a longer-term, strategic effort for customers.
- Stacy Rasgon (Bernstein): Pressed management on gross margin trends as system sales increase. CFO Kirsten Spears explained that gross margins will decline but operating margin dollars should rise due to operating leverage from higher revenue.
- Blayne Curtis (Jefferies): Asked about the nature of recent system sales and whether Broadcom’s approach mirrors Google’s networking architecture. Tan confirmed the move to system-level sales and said full systems now include Broadcom’s key components, with customization varying by customer.
- Harsh Kumar (Piper Sandler): Sought details on AI revenue growth diversity and the strategic importance of optical components. Tan described strong demand across multiple customers and highlighted the growing contribution from switches, DSPs, and optical components, with system orders comprising both XPU and non-XPU elements.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace at which Broadcom converts its expanding AI order backlog into revenue, (2) the impact of system-level sales on both gross and operating margins, and (3) the continued adoption and integration of VMware Cloud Foundation within the infrastructure software segment. Progress in advanced packaging capacity and supply chain resilience will also be critical for meeting delivery commitments.
Broadcom currently trades at $326.28, down from $406.60 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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