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Broadcom Inc. (AVGO) reported a robust third-quarter fiscal 2025 performance on September 4, with non-GAAP earnings of $1.69 per share, surpassing estimates by 1.81%, and a 28% year-over-year increase. Revenues climbed 22% to $15.95 billion, beating forecasts by 0.78%. The stock has risen 13% since the earnings report.
In Q3, Broadcom’s AI revenues surged 63% year-over-year to $5.2 billion, with XPUs contributing 65% of this total. The consolidated backlog reached $110 billion, and the company forecasts fourth-quarter semiconductor revenues of $10.7 billion, a 30% increase year-over-year. As of August 3, 2025, cash and cash equivalents stood at $10.72 billion with free cash flow representing 44% of revenue.
Despite strong earnings, gross margins are expected to decline by 70 basis points due to a higher mix of lower-margin XPUs in the fourth quarter. Broadcom maintains a Zacks Rank #3 (Hold), suggesting investors may want to wait for a more favorable entry point.
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