Analyst(s): Ray Wang
Publication Date: September 9, 2025
Broadcom’s Q3 FY 2025 earnings report highlights continued strength in AI semiconductors, VMware software, and networking solutions. Momentum in custom accelerators and infrastructure software supported record results, while management issued guidance for further growth in the upcoming quarter.
What is Covered in this Article:
- Broadcom’s Q4 FY 2025 financial results
- Expansion of custom accelerators with a fourth major XPU customer
- AI networking growth with Tomahawk 6 and Jericho 4 platforms
- VMware Cloud Foundation is driving software revenue and margin gains
- Q4 guidance, record backlog, and leadership continuity through FY 2030
The News: Broadcom Inc. (NASDAQ: AVGO) announced its Q3 FY 2025 results, reporting record revenue of $16.0 billion, up 22% YoY and above consensus estimates of $15.8 billion. Semiconductor solutions revenue rose 26% YoY to $9.2 billion, while Infrastructure software revenue increased 17% YoY to $6.8 billion. AI semiconductor revenue surged 63% YoY to $5.2 billion, extending ten consecutive quarters of growth. Free cash flow increased to $7.0 billion, up from $4.8 billion in Q3 FY 2024.
“Broadcom achieved record third quarter revenue on continued strength in custom AI accelerators, networking, and VMware. Q3 AI revenue growth accelerated to 63% year-over-year to $5.2 billion,” said Hock Tan, President and CEO of Broadcom Inc. “We expect growth in AI semiconductor revenue to accelerate to $6.2 billion in Q4, delivering eleven consecutive quarters of growth, as our customers continue to strongly invest.”
Broadcom Q3 FY 2025 Earnings Beat Estimates Amid AI Semi Acceleration
Analyst Take: Broadcom’s Q3 FY 2025 results underscore the company’s position as a key beneficiary of the accelerating AI investment cycle and its strategic integration of VMware. Record revenue, robust AI semiconductor growth, and sustained free cash flow highlight the company’s leadership in AI.
Broadcom’s growth is primarily fueled by its leadership in hyperscaler XPU programs, spanning Google’s TPU, Meta’s MTIA, and others. Notably, Google’s TPU has been ramping shipments since late Q1 this year, contributing a significant share to revenue momentum. This momentum is partly driven by Google’s rapid progress across its AI stack, alongside the surge in AI inference and token generation in recent months. The success of TPU deployments underscores this trend and highlights the growing need for additional TPU capacity to support Google’s AI initiatives and broader platform ecosystem.
As hyperscalers push to develop custom XPUs to diversify compute away from NVIDIA and mitigate the high costs of GPU deployments—despite reported design and scaling challenges—we believe a significant portion of this XPU investment will translate into incremental upside for Broadcom, given its position as a leading XPU design partner.
According to our Silicon Tracker—our proprietary dataset monitoring the AI chip supply chain—Broadcom currently has at least five identified XPU customers: Google, Meta, OpenAI, Arm/SoftBank, and ByteDance. We also see potential collaboration with Apple, which may engage Broadcom in the development of its future XPU for AI server deployments. As XPUs continue to mature and shipment volumes ramp, we expect Broadcom’s upside to accelerate further—consistent with our Data Center Semiconductor Model, which projects Broadcom’s growth rate to outpace even NVIDIA’s over the forecast horizon.
Custom Accelerators Expand With Fourth Customer
AI semiconductor revenue surged 63% YoY to $5.2 billion, fueled by Broadcom’s growing portfolio of custom accelerators. The company secured a fourth significant XPU customer, widely reported to be OpenAI, with over $10 billion in committed orders beginning shipments in FY 2026. This builds on strong adoption across its three existing hyperscale customers, where Broadcom continues to gain share with each new generation of accelerators. Management noted that XPUs now represent 65% of AI revenue. The extension of Broadcom’s customer base not only diversifies revenue streams but also materially improves FY 2026 AI revenue visibility. This expansion supports management’s statement that FY 2026 AI growth will exceed the already strong trajectory of 2025.
AI Networking Gains Strategic Importance
Networking revenue tied to AI clusters remained a key growth driver, as hyperscale customers confront challenges of scaling compute beyond 100,000 nodes. Broadcom highlighted its Ethernet-based Tomahawk 6 switch (launched in June), capable of delivering 102 Tbps performance, which reduces network tiers and latency while improving power efficiency. The Jericho 4 router was also launched, supporting congestion control and scale across multiple data centers, enabling clusters beyond 200,000 nodes. These networking innovations are critical to addressing large-scale AI training and inference bottlenecks.
Broadcom’s networking business—though sometimes overshadowed—remains a critical driver of its AI opportunity. Given the structural need for scale-up, scale-out, and increasingly scale-across architectures, we are highly constructive on Broadcom and the broader networking segment within AI data centers. NVIDIA’s recent earnings highlighted the momentum in accelerated networking. Broadcom’s traction reinforces our view that demand for high-performance networking and acceleration is inevitable and poised to expand further in the coming quarters.
VMware Integration Unlocks Software Growth
Infrastructure software revenue rose 17% YoY to $6.8 billion, benefiting from VMware’s transition to subscription-based VMware Cloud Foundation (VCF). Management noted that more than 90% of VMware’s top 10,000 customers have adopted VCF, with deployments expanding across enterprise data centers. The launch of VCF version 9.0, a fully integrated platform supporting AI workloads and traditional applications, marked a significant milestone in Broadcom’s software strategy. Gross margins in the segment improved to 93% (Q3 FY 2024: 90%), with operating margin rising to 77% (Q3 FY 2024: 67%), reflecting integration synergies. Over $8.4 billion in bookings during Q3 further highlights strong customer commitment. The two-phase VMware strategy—migrating customers to VCF and then scaling advanced services like disaster recovery and AI workloads—provides a durable foundation for software-led margin expansion.
Non-AI Semiconductor Outlook Remains Mixed
Broadcom’s non-AI semiconductor business, at roughly $4 billion in Q3, remains slow to recover, with sequential revenue flat. Management described the trend as a U-shaped recovery, with broadband showing strong improvement while enterprise networking, server storage, and industrial segments remain subdued. Orders are improving, with bookings up more than 20% YoY, yet the company cautioned against expecting a sharp rebound. Broadband upgrades, including DOCSIS 4.0 in the US and China, represent near-term catalysts, though other segments continue to lag. This segment is expected to grow in the low double-digits sequentially in Q4, reaching approximately $4.6 billion. A fuller cyclical recovery is likely to materialize only by mid-to-late 2026.
Guidance and Final Thoughts
Management guided Q4 FY 2025 revenue to $17.4 billion (consensus: $17.1 billion), up 24% YoY, with adjusted EBITDA expected at 67% of revenue. AI semiconductor revenue is projected to reach $6.2 billion (consensus: $5.8 billion), marking the eleventh consecutive quarter of growth. Infrastructure software revenue is expected to sustain at $6.7 billion, with margins supported by VMware integration. Gross margin will decline by 70 bps sequentially due to a higher mix of XPUs and wireless, though operating leverage is expected to maintain EBITDA stability. Importantly, Broadcom disclosed a record consolidated backlog of $110 billion, with at least half tied to semiconductors, providing multi-year visibility.
With CEO Hock Tan extending his tenure through FY2030, we remain confident that Broadcom’s leadership in XPUs and VMware will position the company for sustained growth acceleration over the coming quarters and years. In XPUs specifically, we view competition with NVIDIA as far from a “zero-sum” dynamic, given the exponentially expanding compute TAM. We believe this trend will accelerate Broadcom’s growth trajectory in the coming years, particularly as hyperscalers become increasingly determined to pursue in-house compute designs.
See the full press release on Broadcom’s Q3 FY 2025 earnings on the Broadcom website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Ray Wang is the Research Director for Semiconductors, Supply Chain, and Emerging Technology at Futurum. His coverage focuses on the global semiconductor industry and frontier technologies. He also advises clients on global compute distribution, deployment, and supply chain. In addition to his main coverage and expertise, Wang also specializes in global technology policy, supply chain dynamics, and U.S.-China relations.
He has been quoted or interviewed regularly by leading media outlets across the globe, including CNBC, CNN, MarketWatch, Nikkei Asia, South China Morning Post, Business Insider, Science, Al Jazeera, Fast Company, and TaiwanPlus.
Prior to joining Futurum, Wang worked as an independent semiconductor and technology analyst, advising technology firms and institutional investors on industry development, regulations, and geopolitics. He also held positions at leading consulting firms and think tanks in Washington, D.C., including DGA–Albright Stonebridge Group, the Center for Strategic and International Studies (CSIS), and the Carnegie Endowment for International Peace.
