Why Broadcom’s Stock Hit An All-Time High: Analysis

Broadcom’s stock reached an all-time high this week at $256 per share. From data center chip traction to recent quarterly earnings results, here are some of the main reasons why Broadcom stock is soaring.

Broadcom’s stock (AVGO) reached a record high of more than $256 per share Thursday, trading up 75 percent compared with just two months ago, as the tech giant now has a $1.2 trillion market cap.

In early April, Broadcom’s stock was trading at $146 per share compared with $253 per share as of Friday morning. There are several key reasons why the San Jose, Calif.-based tech giant is gaining so much investor interest and market traction, and it all starts with AI.

Broadcom has cemented itself as a top supplier of custom data center chips and networking hardware that power AI workloads.

Broadcom’s AI revenue jumped to $4.4 billion during its second fiscal quarter 2025, which ended in May, representing a 46 percent growth rate year over year. Specifically, AI networking sales increased 70 percent due to the growing demand for Broadcom’s routers and switches.

“We expect growth in AI semiconductor revenue to accelerate to $5.1 billion in Q3, delivering 10 consecutive quarters of growth, as our hyperscale partners continue to invest,” said Broadcom CEO Hock Tan during the company’s second-quarter earnings report last week.

Broadcom Expects Huge Sales From Hyperscalers

Another key reason why Broadcom’s stock is trading at an all-time high is due to the company revealing this month that several of its hyperscale customers are planning to deploy millions of its AI data center chips by 2027, with billions of dollars potentially on the line.

Although these hyperscale customers have not been identified, the three largest cloud hyperscalers in the world are Google, Microsoft and Amazon Web Services. Broadcom helps hyperscalers build and design their own data center chips that can be customized to fit their specific needs.

“Our networking portfolio of Tomahawk switches, Jericho routers and NICs [are] what's driving our success within AI clusters in hyperscalers,” said Tan.

Net Income Soars; Q2 Successful Earnings

Looking closely at Broadcom’s second-quarter earnings report, the company’s operating expenses decreased by 9 percent during the quarter. This helped Broadcom’s net income soar 134 percent year over year to nearly $5 billion compared with $2.4 billion year over year.

Broadcom bested Wall Street quarterly expectations in the second quarter by generating total sales of $15 billion, up 20 percent year over year.

Broadcom’s semiconductor solutions group sales reached $8.4 billion, up 17 percent year over year, which included a 46 percent increase in AI semiconductor revenue.

The company’s infrastructure software revenue climbed 25 percent year over year to $6.6 billion.

In addition, Broadcom reported $6.4 billion in free cash flow and a 43 percent margin.

Broadcom is projecting $15.8 billion in revenue for its current third fiscal quarter, above analysts’ initial expectations.

‘Extremely Strong Interest’ In Broadcom’s New Tomahawk 6

Broadcom provides networking switches for data centers and customers around the world. Investors are also likely bullish about Broadcom’s recently unveiled Tomahawk 6 switches, which allow up to 100,000 accelerators to be deployed in a two-tier environment instead of a three-tier environment.

Broadcom’s CEO said the Tomahawk 6 will drive sales for the company by reducing customer latency and accelerating AI training and inference.

“There’s extremely strong interest now [for our Tomahawk 6]. We're not shipping big orders or any orders other than basic proofs of concept out to customers,” said Tan this month. “Our Tomahawk 6 switch represents the next-generation 102.4-terabytes-per-second switch capacity.”

VMware Enterprise Customers Adopting VCF

Another key factor that investors are looking at is Broadcom’s traction around VMware.

Broadcom reported second-quarter infrastructure software revenue of $6.6 billion, up 25 percent year over year. Tan said this growth was attributed to customers selecting the VMware Cloud Foundation (VCF) stack.

“This growth reflects our success in converting our enterprise customers from perpetual vSphere to the full VCF software stack subscription,” said Tan. “Of our 10,000 largest customers, over 87 percent have now adopted VCF.”

For its current third-quarter 2025, Broadcom expects infrastructure software revenue to increase 16 percent year over year to $6.7 billion.

For long-term Broadcom shareholders, the company’s stock has delivered a 710 percent return over the past five years, making it a top-tier growth stock in the technology sector.