Broadcom (AVGO) is slated to report its third-quarter FY25 results on September 4, with investors and analysts closely watching for signs of continued momentum in AI-related demand and hyperscaler spend.
What the street expects
Analysts are modeling Broadcom to deliver solid top- and bottom-line progress in Q3. The consensus calls for earnings of about $1.66 per share, up from $1.24 in the year-ago quarter, on revenue of roughly $15.82 billion, a year-over-year rise of about 21%. The growth is widely attributed to Broadcom’s expanding AI-related offerings and a robust artificial intelligence (AI) deployment cycle across hyperscalers.
Key analyst insights ahead of the print
Citi’s Christopher Danely reiterated a Buy rating with a target of $315, arguing that Broadcom should eclipse consensus on both revenue and earnings. Danely highlights a substantial AI contribution, projecting AI-related revenue to climb about 60% year over year in FY25 to around $19.5 billion. He also anticipates stronger Q4 guidance on the back of higher orders from major customers such as Google and Meta, though he notes ongoing margin pressures as the AI mix deepens.
Susquehanna’s Christopher Rolland also remains bullish, boosting his price target from $300 to $350 while maintaining a Buy rating. Rolland expects Broadcom to meet or slightly exceed forecasts, supported by healthy demand in AI chips, networking products, and an ongoing recovery in Broadcom’s core semiconductor business. He emphasizes strong capex plans from cloud giants—Google and Meta among them—as a driver for steady demand for Broadcom’s AI accelerators and networking chips. While Rolland acknowledges near-term margin pressure as AI chip sales rise, he sees the longer-term AI growth story as a favorable driver, with expectations of large XPU deployments by Google, Meta, and ByteDance heading into FY27.
Current investor sentiment
On the Street, Broadcom enjoys a Strong Buy consensus, built on a broad mix of Buy ratings and a few Holds over the last three months. The average price target sits in the low $310s, implying a modest upside from current levels. Through the year to date, Broadcom has posted solid gains, underscoring the market’s ongoing confidence in its AI and hyperscaler exposure.
What to watch for in the Q3 print and beyond
– AI momentum and product mix: Broadcom’s AI accelerators and related networking chips remain a core growth engine, with expectations for continued strong demand from hyperscalers.
– Q4 guidance: Analysts will look for commentary and guidance that supports continued AI-driven growth, particularly any signal of stronger orders from Google, Meta, ByteDance, OpenAI, or Apple.
– Margin dynamics: As AI-related portions of revenue rise, investors will scrutinize gross and operating margins to gauge how Broadcom balances higher AI mix with pricing and cost structure.
– Long-term pipeline: The breadth of Broadcom’s hyperscaler pipeline—beyond the big names to include emerging players—will be a barometer for durability of growth.
Bottom line
Broadcom appears well-positioned to capitalize on AI-driven demand from major cloud players, with multiple top analysts signaling confidence in both near-term results and the longer-term AI growth story. If Q3 delivers results above or in line with expectations and management reinforces constructive AI-driven guidance for Q4, the stock could see continued investor interest, supported by a favorable risk-reward outlook amid the AI data-center cycle.
Takeaways for readers
– The road ahead hinges on AI-related revenue growth, hyperscaler orders, and margin management as Broadcom deepens its AI portfolio.
– Positive commentary on Q4 guidance and continued AI momentum would be a meaningful catalyst.
– Investors should monitor the balance between AI-driven growth and potential near-term margin pressures as the company expands its AI technology footprint.