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Broadcom reported a significant revenue increase in its semiconductor solutions segment, reaching $8.4 billion in Q2 of fiscal 2025, up 17% year-over-year. The AI-semiconductor business specifically grew by 46% to $4.4 billion, marking nine consecutive quarters of growth in this area. The company anticipates AI-semiconductor revenues to hit $5.1 billion in Q3 of fiscal 2025.
The semiconductor segment’s gross margin rose to 69%, a 140 basis point increase year-over-year, while the operating margin expanded to 57%, up 200 basis points. This growth is primarily driven by demand from hyperscale customers utilizing Broadcom’s custom ASICs and networking solutions, including the newly launched Tomahawk 6 Ethernet switch.
Despite this momentum, Broadcom faces stiff competition from AMD and NVIDIA, both of which are strengthening their foothold in the AI and data center market. Currently, Broadcom shares have grown 16.5% year-to-date, compared to the broader Zacks Electronics – Semiconductors industry at 11.2%.
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