Broadcom Inc. (AVGO) Stock: Slides 4% After Hours Despite AI Revenue Soar by 46%

TLDR

• AI Push Powers Broadcom’s Q2 Surge, But Shares Dip 4.4% After Hours.

• Broadcom Hits $15B Revenue on AI Demand, Yet Profit-Takers Trigger After-Hours Drop.

• Strong Q2, Big Buybacks, $7B Returned — But Market Reacts Cautiously.

• AVGO Sees 46% AI Revenue Growth, Eyes $5.1B in Q3, Still Faces Near-Term Selloff.

• Broadcom’s Solid Earnings and Dividend Stay Intact Amid AI Momentum and Volatile Trading.

Broadcom Inc. (AVGO) shares closed at $259.93 on June 5, down 0.44% during regular trading. However, after hours, the stock dropped sharply by 4.44%, falling to $248.38.

Broadcom Inc. (AVGO)

AI Revenue Boosts Broadcom’s Growth

Broadcom reported $15 billion in revenue for the second quarter of fiscal 2025, marking a 20% year-over-year increase. A major contributor to the growth was a 46% surge in AI-related semiconductor sales totalling $4.4 billion. The company credited hyperscaler demand for AI networking as the primary growth engine.

Adjusted net income rose to $7.79 billion. The company posted GAAP net income of $4.97 billion and adjusted EBITDA of $10 billion, representing 67% of revenue. Consequently, the company’s profit margins and operating metrics remained strong despite broader market volatility.

Broadcom’s CEO said AI revenue could reach $5.1 billion in the third quarter. The company forecasts its third-quarter guidance of $15.8 billion in total revenue.

Market Reacts Despite Strong Cash Position

Broadcom shares fell 4.44% to $248.38 after the market closed. The sudden drop came after the stock approached its all-time high during the regular session. Free cash flow reached $6.41 billion in the quarter, rising 44% year-over-year and accounting for 43% of revenue.

Broadcom repurchased $4.2 billion worth of stock and paid $2.8 billion in dividends, returning a total of $7 billion to shareholders. The company’s balance sheet remains stable, with cash and equivalents totalling $9.47 billion.

Capital expenditures remained low at $144 million, highlighting operational efficiency and continued cost discipline. Analysts noted that the company’s cash strategy strengthens investor confidence in the long term.

Broadcom Maintains Dividends

Broadcom maintained its guidance for the upcoming quarter, expecting revenue of $15.8 billion and adjusted EBITDA of at least 66%. This projection represents a 21% increase from the same period last year. The company also reiterated its strategy of investing in AI infrastructure and enterprise software.

The Board declared a quarterly dividend of $0.59 per share to be paid on June 30 to shareholders of record on June 20. This aligns with the company’s commitment to consistent shareholder returns. Broadcom’s dividend policy and repurchase activity continue to support its long-term investment case.

Future Outlook

Despite short-term volatility, Broadcom appears well-positioned in AI and infrastructure markets. The company’s consistent performance and stable margins provide a strong foundation. Investors will now watch for delivery on third-quarter AI growth targets and broader market sentiment shifts.