Key Takeaways AVGO's fiscal Q4 Semiconductor revenue is expected to rise 30% YoY, driven by strong AI accelerator demand. AI revenues are projected to grow 66% YoY to $6.2B, with XPUs making up 65% of that segment's Q3 total. Infrastructure Software revenue is set to rise 15% YoY, aided by VMware's traction and VCF 9.0 adoption. Broadcom’s (AVGO) fourth-quarter fiscal 2025 results, set to be reported on Dec. 11, are expected to reflect the benefits of expanding AI offerings. AVGO’s Semiconductor segment rev ...

Key Takeaways AVGO expects Q4 revenue of $17.4B, up 24.5% year over year, driven by AI and software growth.AI revenues are projected to jump 66% to $6.2B, led by demand for custom accelerators like XPUs. Gross margin is forecast to dip 70 bps sequentially due to a higher mix of lower-margin XPUs. Broadcom (AVGO) is set to report its fourth-quarter fiscal 2025 results on Dec. 11.For fourth-quarter fiscal 2025, AVGO expects revenues of $17.4 billion. The Zacks Consensus Estimate for revenues is pegged at $17. ...

Core Insights - Credo Technology Group Holding Ltd. (CRDO) reported strong second-quarter fiscal 2026 results, driven by the rapid growth of its Active Electrical Cable (AEC) business and increasing traction with major hyperscale customers [1][2] Financial Performance - In the fiscal second quarter, CRDO achieved revenues of $268 million, reflecting a 20% sequential increase and a remarkable 272% year-over-year growth [2][11] - The company anticipates a 27% sequential revenue increase for the fiscal third quarter and projects fiscal 2026 revenues to grow over 170% year over year [6][11] Customer Base and Market Dynamics - Four hyperscalers contributed more than 10% each to total revenues, with a fifth hyperscaler beginning to generate initial revenues, indicating strong adoption of CRDO's AEC solutions [3][11] - The emergence of a fifth hyperscaler and strengthened customer forecasts mark a significant inflection point for the company [3][6] Product and Technology Advancements - AECs have become the standard for inter-rack connectivity, replacing optical connections up to 7 meters, offering up to 1,000 times more reliability and 50% lower power consumption compared to optical solutions [4] - CRDO's architecture is designed to meet the critical demands of AI clusters, focusing on reliability, signal integrity, latency, power efficiency, and total cost of ownership [5] Competitive Landscape - Broadcom and Marvell Technology are also making significant strides in the AI space, with Broadcom securing over $10 billion in orders for AI racks and Marvell reporting a 37% year-over-year revenue increase [8][10] - Marvell's acquisition of Celestial AI, which specializes in Photonic Fabric technology, is expected to enhance its capabilities in optical interconnects [10][12] Valuation and Market Performance - CRDO is currently trading at a forward 12-month Price/Sales ratio of 28.87, significantly higher than the Electronic-Semiconductors sector's multiple of 7.9 [13] - The company's shares have increased by 40.6% in the past month, outperforming the Electronics-Semiconductors industry's growth of 25.4% [14]

Core Insights - Broadcom (AVGO) shares have increased by 106.3% over the past 12 months, significantly outperforming the Zacks Electronics – Semiconductors industry's return of 71.4% and the broader Zacks Computer and Technology sector's growth of 30.7% [1][2] - The company is experiencing strong demand for XPUs, which are essential for training Generative AI models, leading to a substantial increase in AI revenues [1][6] Company Performance - In Q3 of fiscal 2025, Broadcom's AI revenues rose by 63% year over year to $5.2 billion, with XPUs contributing 65% of total AI revenues [6][10] - The consolidated backlog reached $110 billion, and the company secured over $10 billion in orders for AI racks driven by XPU demand [6][10] - Broadcom anticipates Q4 semiconductor sales to increase by 30% year over year, with software revenues expected to rise by 15% [7][10] Product Development - Broadcom launched the first Wi-Fi 8 silicon solutions for the broadband wireless edge ecosystem and began shipping the Tomahawk 6 - Davisson Ethernet switch, designed for AI networking demands [7][9] - The Jericho 4 Ethernet fabric router can interconnect over one million XPUs across multiple data centers, and the Thor Ultra is the first 800G AI Ethernet Network Interface Card [9][10] Market Position - Broadcom's partner base includes major companies like OpenAI, Walmart, and Meta Platforms, which is expected to drive top-line growth [10] - The company is outperforming competitors such as NVIDIA, Marvell Technology, and AMD in terms of stock performance [2][10] Financial Outlook - The Zacks Consensus Estimate for fiscal 2025 earnings is $6.72 per share, indicating a 38% growth from fiscal 2024, with revenues projected at $63.36 billion, suggesting a 22.9% increase [13] - However, a higher mix of lower-margin XPUs is expected to pressure gross margins, with a forecasted decline of 70 basis points sequentially [11][12] Valuation Concerns - Broadcom's stock is considered overvalued, trading at a forward price/sales ratio of 18.72X, significantly higher than the sector average of 6.85X and competitors like NVIDIA and AMD [14][17] - Despite strong growth potential, the declining gross margin and challenging macroeconomic conditions raise concerns about the premium valuation [17][18]

Core Insights - Broadcom (AVGO) and Cisco Systems (CSCO) are experiencing strong demand due to the growth of AI infrastructure, data center expansions, and increasing cybersecurity threats [1][2][3] - Both companies are well-positioned to benefit from projected AI spending, which is expected to reach $1.48 trillion in 2025 and $2.02 trillion in 2026, compared to $987 billion in 2024 [3] Company Performance - Broadcom's AI revenues are projected to increase by 66% year-over-year to $6.2 billion in Q4 fiscal 2025, driven by demand for XPUs and Ethernet products [7][8] - Cisco's AI infrastructure orders reached $2 billion in fiscal 2025, doubling previous expectations, indicating strong market demand [11][12] Product and Technology Developments - Broadcom's XPUs, which are essential for training Generative AI models, accounted for 65% of its AI revenues in Q3 fiscal 2025, with a consolidated backlog of $110 billion [7][10] - Cisco is expanding its AI portfolio with new solutions such as the Unified Nexus Dashboard and 400G bidirectional optics, enhancing its data center capabilities [11][12] Strategic Partnerships - Cisco's partnership with NVIDIA aims to create AI-ready data center networks, integrating Cisco Nexus switches with NVIDIA's Spectrum-X architecture for improved performance [12][13] Earnings Estimates - The Zacks Consensus Estimate for Broadcom's fiscal 2025 earnings is $6.72 per share, reflecting a 38% increase over fiscal 2024 [14] - Cisco's fiscal 2026 earnings estimate has increased to $4.04 per share, suggesting a 6% growth over fiscal 2025 [15] Valuation Insights - Both companies are considered overvalued, with Broadcom trading at a forward price/sales ratio of 20.18X, significantly higher than Cisco's 4.69X [17] Future Outlook - Cisco's aggressive AI initiatives and expanding portfolio are expected to drive top-line growth, while Broadcom's partnerships and AI portfolio expansion are key catalysts for future performance [20]

Core Insights - Broadcom's shares increased by 9.88% to $356.70 following the announcement of a partnership with OpenAI to develop 10 gigawatts of custom AI accelerators [1][9]. Partnership and Collaboration - Under the agreement, OpenAI will design the AI accelerators and systems, while Broadcom will handle their development and manufacturing for deployment across OpenAI's facilities and partner data centers [2]. - Broadcom and OpenAI have a history of collaboration in co-developing and supplying AI accelerators, now formalized with a term sheet for integrating OpenAI's custom chips with Broadcom's networking technologies [2]. Market Position and Performance - Broadcom has a diverse partner network, including major companies like Walmart, NVIDIA, and Meta Platforms, which supports its expanding portfolio and revenue growth [3]. - Year-to-date, Broadcom shares have risen by 23.9%, outperforming the broader technology sector and competitors like NVIDIA and Qualcomm [4]. Financial Performance - In Q3 of fiscal 2025, AI revenues surged by 63% year-over-year to $5.2 billion, with XPUs accounting for 65% of these revenues [11]. - The consolidated backlog reached $110 billion, with over $10 billion in orders for AI racks driven by XPU demand [11]. - Broadcom anticipates Q4 fiscal 2025 semiconductor revenues of $10.7 billion, indicating a 30% year-over-year growth [13]. Product Development - Broadcom launched the first Wi-Fi 8 silicon solutions for broadband wireless applications, and its Tomahawk 6 Ethernet switch is designed for AI networking demands, offering 102.4 terabits per second switching capacity [12]. Financial Health - As of August 3, 2025, Broadcom reported cash and cash equivalents of $10.72 billion, with a cash flow from operations of $7.17 billion and free cash flow of $7.02 billion, representing 44% of revenues [14]. - The company paid $2.8 billion in cash dividends in Q4 of fiscal 2025, supported by its strong balance sheet [15]. Challenges and Outlook - Broadcom's Q4 guidance indicates a 70 basis point decline in gross margin due to a higher mix of lower-margin XPUs, which may pressure margins throughout fiscal 2025 [16]. - The company expects non-AI semiconductor revenues to grow in the low double digits sequentially, while a sluggish non-AI business remains a headwind [17]. Valuation Metrics - Broadcom's stock is trading at a premium, with a forward price/sales ratio of 20.08X, significantly higher than the sector average of 6.9X and competitors like Qualcomm [19][20]. Conclusion - Broadcom's expanding AI portfolio and strong partner base indicate solid growth potential, but declining gross margins and macroeconomic challenges raise concerns about its premium valuation [23].

Core Insights - Broadcom's semiconductor revenues are significantly boosted by the rising demand for XPUs, essential for training Generative AI models, with a 26% year-over-year increase in Q3 fiscal 2025 [1][10] - AI revenues surged 63% year-over-year to $5.2 billion, with XPUs contributing 65% of these revenues [1][10] - The consolidated backlog reached $110 billion, with over $10 billion in orders for AI racks driven by XPU demand [2] Financial Performance - Semiconductor solutions revenues accounted for 57.5% of net revenues, totaling $9.17 billion in Q3 fiscal 2025 [1] - Fourth-quarter fiscal 2025 AI revenues are expected to rise 66% year-over-year to $6.2 billion, while semiconductor revenues are projected to grow 30% year-over-year to $10.7 billion [4][10] - The Zacks Consensus Estimate for semiconductor sales is $10.44 billion, indicating a 27% growth from the previous year [4] Product Developments - Broadcom has launched the Tomahawk 6, the first 102.4 Terabits/sec Ethernet switch, and the Tomahawk Ultra, achieving 250ns switch latency at full 51.2 Tbps throughput [3] - The Jericho4 Ethernet fabric router can interconnect over one million XPUs across multiple data centers [3] Competitive Landscape - Broadcom faces intense competition in the semiconductor market from NVIDIA and AMD [5] - NVIDIA is capitalizing on the growth of AI and high-performance computing, with upcoming Blackwell Ultra GPUs expected to enhance AI inference capabilities [6] - AMD's growth is supported by strong demand for its Instinct accelerators, with significant adoption among top AI companies [7] Stock Performance and Valuation - Broadcom's shares have increased by 59% year-to-date, outperforming the broader Zacks Computer and Technology sector, which returned 16.8% [8] - The stock is trading at a forward 12-month price/earnings ratio of 45.57X, compared to the sector's 28.27X, indicating a premium valuation [12] - The Zacks Consensus Estimate for fiscal 2025 earnings is $6.71 per share, reflecting a 37.8% growth from fiscal 2024 [15]