Shares of semiconductor firm Broadcom (AVGO) jumped in after-hours trading. This comes after the company reported earnings for its first quarter of Fiscal Year 2025, which were followed by solid guidance. Earnings per share came in at $1.60, which beat analysts’ consensus estimate of $1.51 per share. It’s worth noting that Broadcom has beaten earnings estimates in each of its past nine quarters.
In addition, sales increased by 24.7% year-over-year, with revenue hitting $14.92 billion. This also beat analysts’ expectations of $14.62 billion. The company’s results were driven by the significant growth seen in AI semiconductor solutions and infrastructure software. AI revenue soared by 77% year-over-year to $4.1 billion, while infrastructure software revenue jumped 47% year-over-year to $6.7 billion. In addition, adjusted EBITDA increased by 41% year-over-year to a record $10.1 billion, while free cash flow rose by 28% year-over-year to $6 billion.
The firm also announced a $0.59 per share dividend, which equates to a 1.32% annualized yield based on today’s closing price. However, it’s worth noting that the current yield is near the low end of its historical range, which indicates that the stock is relatively overvalued compared to the past for investors interested in income.
Guidance for Q2 2025:
Looking forward, management has provided the following guidance for Q2 2025:
- Revenue of $14.9 billion versus analysts’ estimates of $14.73 billion.
- Adjusted EBITDA margin of 66% compared to expectations of 64.3%.
As we can see, the company’s revenue and EBITDA outlook are better than expected, which likely led to the after-hours jump in the stock price.
Is AVGO Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AVGO stock based on 23 Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 29% rally in its share price over the past year, the average AVGO price target of $243.48 per share implies 35.73% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
