Broadcom (AVGO)

[2BToo]

Thanks Adam. MEDP has dropped over the last six months. If we/you made (an impressive) 102% then the holding must have started a while ago.

[Adam Kay]

We paid 165 initially

[Adam Kay]

That gain is point to point. The actually gain will be more because we were selling it in the 400’s too

[S6PNJ]

@Adam-Kay Did these get swapped out in the end? I haven't seen any email referring to this - the last email I've had from Cobens was the one sent on 28 March - Spring Forecast 2025. Thanks!

[Ronski]

I took post number 3 above to mean they have been purchased, and the others sold, thus updated my spreadsheet.

I also have not had an email relating to the sale/purchase.

[Adam Kay]

The post is correct. We haven't 'released' the email yet. Probably will in May.

[Ronski]

Why would you wait that long to release the email?

[Adam Kay]

Hi Ron,

Because our quarter end official meeting is on Friday. Official comms will be the following week. Regards
Adam

[Adam Kay]

Broadcom will report earnings on Thursday after the close. I will provide a summary of expectations and recently highlights, tomorrow.

[Adam Kay]

AVGO is due to report Q2 earnings tomorrow. Here is what is expected. They will almost certainly beat and guide higher. We will be watching for comments around their ASICS segment and VMWare. A fantastic business, acquired at a fair price.

We acquired the stock on 18 March @ $193 and today it sits at an all time high of $260.

[Adam Kay]

A solid result from AVGO, beating expectations and guiding higher-ahead of consensus expectations. Asics is growing dramatically with the growth trend continuing through 2026.

Q2 FY2025 Results:
Revenue: $15.004 billion, up 20% year-on-year, meeting estimates of $14.99 billion.
AI Semiconductor Revenue: $4.4 billion, up 46% year-on-year.
Infrastructure Software Revenue: $6.6 billion, up 25% year-on-year, exceeding guidance of $6.5 billion.
Semiconductor Solutions Revenue: $8.4 billion, up 17% year-on-year.
Adjusted EBITDA: $10.0 billion, up 35% year-on-year (67% of revenue).
Free Cash Flow: $6.4 billion, up 44% year-on-year (43% of revenue).
Capital Allocation: Paid $2.8 billion in dividends and repurchased $4.2 billion in shares.
Q3 FY2025 Guidance:
Revenue: $15.8 billion, up 21% year-on-year, slightly above estimates of $15.72–$15.79 billion.
AI Semiconductor Revenue: $5.1 billion, up 60% year-on-year.
Semiconductor Revenue: $9.1 billion, up 25% year-on-year.
Infrastructure Software Revenue: $6.7 billion, up 16% year-on-year.
Adjusted EBITDA: Expected at 66% of revenue.
Management Insights
Hock E. Tan, CEO, highlighted, “Our record Q1 and Q2 revenues of $15.004 billion reflect strong AI demand and VMware momentum.” He noted AI networking (Ethernet-based) contributed 40% of AI revenue and introduced the Tomahawk 6 switch, enabling efficient AI clusters with 102.4 terabits per second capacity. Tan projected “accelerated XPU demand in late 2026 for inference and training.” Kirsten M. Spears, CFO, added, “Gross margins of 79.1% in Q1 and 79.4% in Q2 exceeded forecasts due to a favourable product mix.”
Outlook and 2026 Expectations
Broadcom anticipates continued growth, with Q3 revenue guidance of $15.8 billion and AI semiconductor revenue expected to sustain its FY2025 growth rate into FY2026. Management expressed confidence in organic growth, supported by innovations like Tomahawk 6 and strong VMware Cloud Foundation adoption (over 85% of top 10,000 customers).
Risks and Challenges
Non-AI semiconductor revenue remains sluggish, with slow recovery.
Free cash flow is impacted by VMware acquisition debt interest and higher taxes.

The stock is at an all time high so we would expect a bit of churn as recently macro events play out and the stock forms a solid base to spring board to the next level. A fantastic business that has a very bright future.