Broadcom(US:AVGO) Zhao Yin Guo Ji·2025-06-09 08:37Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry is expected to perform better than the market benchmark over the next 12 months [7]. Core Insights - The semiconductor sector is experiencing robust growth driven by AI-related demand, with significant revenue increases reported by key players like Broadcom [2][4]. - Broadcom's AI business is a core growth driver, with AI-related revenue reaching $4.4 billion, accounting for 29.3% of total revenue, and expected to grow by 60% year-over-year [4]. - The demand for AI infrastructure is rapidly increasing, with projections that major cloud providers will deploy millions of accelerator clusters by 2027, aligning with the company's market serviceable target of $60-90 billion for AI accelerators [4]. Summary by Sections Semiconductor Industry Overview - The semiconductor industry is witnessing a strong performance, with Broadcom reporting record revenues of $15 billion in Q2 FY2025, a 20.2% year-over-year increase [2]. - The gross margin for Broadcom improved to 79.4%, reflecting operational efficiency and strong demand in AI semiconductor and software infrastructure [2]. AI Business Impact - Broadcom's AI-related revenue is projected to grow significantly, with management forecasting a 60% increase in AI business revenue this year, driven by rising demand for XPU and network solutions [2][4]. - The AI network business saw revenue growth exceeding 170%, indicating a strong market for AI-related infrastructure [4]. Future Projections - Broadcom anticipates Q3 FY2025 revenue to reach $15.8 billion, with semiconductor business expected to grow by 25% to $9.1 billion [2]. - The company is also focusing on custom chip development in collaboration with major clients, which could further enhance revenue streams in the future [4]. Investment Recommendations - The report maintains "Buy" ratings for several companies within the semiconductor supply chain, including Zhongji Xuchuang, Shengyi Technology, and Shenzhen South Circuit, with target prices set at RMB 151, RMB 34.5, and RMB 146.81 respectively [4].