Broadcom announced its financial results after the U.S. stock market closed on Thursday, showing that the company's first-quarter performance and second-quarter revenue guidance both exceeded expectations. It is expected that AI semiconductor revenue in the second quarter will reach $4.4 billion, signaling to investors that AI computing spending remains strong, which stimulated the company's stock price to rise by as much as 17% in after-hours trading.The following are the key points from Broadcom's Q1 2025 financial report:1. Key Financial Data<blockquote>Revenue: Broadcom's Q1 revenue was $14.92 billion, a year-on-year increase of 25%, compared to analysts' expectations of $14.61 billion.Non-GAAP Net Profit: Broadcom's Q1 non-GAAP net profit was $7.823 billion.Adjusted EBITDA: Broadcom's Q1 adjusted EBITDA was $10.083 billion, accounting for 68% of revenue.Adjusted EPS: Broadcom's Q1 adjusted EPS was $1.60, higher than analysts' expectations of $1.50.Operating Cash Flow: Broadcom's Q1 operating cash flow was $6.113 billion, with free cash flow reaching $6.013 billion after deducting $1 billion in capital expenditures, accounting for 40% of revenue.</blockquote>2. Segment Data<blockquote>Semiconductor Revenue: Broadcom's Q1 semiconductor revenue was $8.2 billion, a year-on-year increase of 11%, exceeding market expectations of $8.1 billion.AI Chip Business Revenue: Broadcom's Q1 AI-related revenue grew by 77% year-on-year, reaching $4.1 billion, mainly due to the strong adoption rate of the company's custom AI accelerators.Infrastructure Software Revenue: Broadcom's Q1 infrastructure software revenue reached $6.7 billion, a year-on-year increase of 47%, exceeding market expectations of $6.5 billion.</blockquote>3. Performance Guidance<blockquote>Revenue: The second-quarter revenue is expected to be approximately $14.9 billion, a year-on-year increase of 19%, higher than analysts' expectations of $14.59 billion.AI Semiconductor Revenue: The second-quarter AI semiconductor revenue is expected to reach $4.4 billion.</blockquote><h2>The AI Spending Boom Continues</h2>Broadcom is one of the major suppliers of data center infrastructure, providing custom AI chips for Google and key components for network infrastructure that supports AI software development. The AI boom once pushed Broadcom's market value above $1 trillion. However, in 2025, investors have become more cautious, seeking to see the long-term sustainability of AI demand, and Broadcom's stock price has fallen 23% this year.However, analysts believe that Broadcom's latest financial report indicates that the historic spending boom in the AI sector is still ongoing. Broadcom is a major beneficiary of this spending, as its data center customers are investing heavily in building new infrastructure. As a result of this news, Broadcom's stock price rose by more than 17% in after-hours trading.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/412055d8-ab28-4731-b3b3-f6ca034cc6e8.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/412055d8-ab28-4731-b3b3-f6ca034cc6e8.png"/>Broadcom CEO Hock Tan stated that in the first fiscal quarter ending February 2, the company benefited from AI-related spending and expects its AI semiconductor revenue in the second fiscal quarter to reach $4.4 billion, as hyperscale data center customers are actively investing in custom AI chips to optimize the computing capabilities of their data centers. He also mentioned that in the past three months, two more large technology companies have begun collaborating with Broadcom to plan large-scale custom AI chips.<blockquote>&#34;Broadcom achieved record revenue and adjusted EBITDA in the first fiscal quarter, primarily driven by the growth of AI semiconductor solutions and infrastructure software. AI-related revenue in the first fiscal quarter grew 77% year-over-year to $4.1 billion, while infrastructure software revenue grew 47% year-over-year to $6.7 billion.&#34;We expect that as hyperscale data center partners continue to invest in AI XPU and AI data center connectivity solutions, AI semiconductor revenue in the second fiscal quarter will continue to see strong growth, reaching $4.4 billion.&#34;</blockquote>Broadcom's CFO Kirsten Spears stated:<blockquote>&#34;Overall company revenue grew 25% year-over-year to a record $14.9 billion. Adjusted EBITDA grew 41% year-over-year to a record $10.1 billion.&#34;&#34;Free cash flow grew 28% year-over-year to $6 billion.&#34;</blockquote><h2>Increased Demand for Custom Chips Will Boost Investment in AI Chip Technology</h2>Although Broadcom faces fierce competition in the AI data center networking equipment sector from Nvidia's Ethernet-style Infiniband products, it remains one of the largest suppliers of AI data center networking equipment and benefits from the expansion of AI data centers.While Broadcom produces various types of chips, including connectivity components and networking technology for the iPhone, investors have recently focused on its custom chip design business. This division helps data center customers develop chips specifically designed to handle massive AI traffic. Additionally, Broadcom is now also a major supplier of enterprise-level software, supporting company operations and network management.Analysts believe that as the complexity of AI computing tasks and personalized demands increase, large technology companies will further turn to custom chips rather than relying on standard chips. This trend is expected to allow Broadcom to continue benefiting.Hock Tan stated during the earnings call that the company is increasing its investment in AI chip technology and is providing the market with cutting-edge AI custom chips, and the company is accelerating the production of AI chips aimed at hyperscale data center operators.He also mentioned that Broadcom currently has three existing customers in this field and expects to add four more, two of which are close to becoming revenue-generating customers.<blockquote>“Our hyperscale partners are still actively investing.”</blockquote>He pointed out that Broadcom's custom semiconductors are, in some cases, more efficient than the general-purpose acceleration chips sold by Nvidia.Hock Tan also revealed that in 2025, Broadcom will launch two new AI chips for hyperscale cloud service providers and add four large hyperscale cloud service provider customers, steadily advancing the deployment of the chipsIn contrast, Broadcom's competitor Marvell Technology also reported strong growth in its AI business but failed to meet investors' high expectations.Another major source of revenue for Broadcom is its infrastructure software business, which includes VMware software products acquired in the fourth quarter of fiscal year 2023.Last week, Oppenheimer analyst Rick Schafer reiterated an &#34;Outperform&#34; rating on Broadcom stock and maintained a target price of $225. In the report, Schafer stated:<blockquote>&#34;We believe Broadcom is one of the most attractive companies in the semiconductor industry in terms of strategic and financial models, and is the second largest AI semiconductor company globally, after Nvidia.&#34;</blockquote>

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Broadcom's financial report shows that the company's performance in the first fiscal quarter and the revenue guidance for the second fiscal quarter both exceeded expectations. It is also expected that AI semiconductor revenue in the second fiscal quarter will reach $4.4 billion, sending a strong signal to investors that AI computing spending remains robust, which stimulated the company's stock price to rise by as much as 17% in after-hours trading. Analysts believe that Broadcom's latest financial report indicates that the historic spending boom in the AI sector is still ongoing. As the complexity of AI computing tasks and personalized demands increase, large technology companies will further turn to custom chips instead of relying on standard chips, a trend that is expected to continue benefiting Broadcom

- Broadcom reported strong first-quarter results, with revenue of $14.92 billion, exceeding analyst expectations, and a projected AI semiconductor revenue of $4.4 billion for the second quarter.  
- The company experienced a 25% year-over-year revenue increase, driven by a 77% rise in AI-related income, indicating sustained demand in the AI sector.  
- Despite a 23% decline in stock value this year, the latest earnings suggest ongoing investment in AI infrastructure by major data center clients, leading to a post-market stock surge of 17%.

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The AI craze is not over! Broadcom's Q2 guidance exceeds expectations, anticipating continued high investment from major clients, rising 17% after hours | Earnings Report Insights