Broadcom's adjusted 74/100 score rewards rapid growth, high margins and strong cash generation. Debt, working capital growing faster than sales, high stock compensation and an expensive approximate valuation limit the score.
What does Broadcom do?
Broadcom earns money from two main businesses. Semiconductors supply data-centre networking, custom AI accelerators, wireless connectivity and storage chips. Infrastructure software includes enterprise cloud and systems software, including VMware products.
What do the FY2025 financials show?
Total revenue increased 24% to $63.89 billion. Semiconductor revenue was $36.86 billion and infrastructure-software revenue $27.03 billion. Gross profit was $43.29 billion with an approximate 68% gross margin. Net income reached $23.13 billion.
Operations generated $27.54 billion of cash; after $623 million of property and equipment expenditure, approximately $26.91 billion remained as free cash. That is about 42% of revenue. Strong cash generation provides an important buffer for debt carried after the VMware acquisition.
Why do the five categories produce this result?
Growth 100/100: Five-year revenue growth was 23.5%, net-income growth 32% and revenue-growth consistency 100%. Because the VMware combination affects historical comparisons, organic growth also needs monitoring.
Profitability 100/100: A 67.8% gross margin, 39.9% operating margin and approximate 39.2% return on capital are strong. Software mix lifts margins, while new AI-system sales may lower gross margin in future.
Cash flow 100/100: A 42.1% free-cash margin and high cash conversion make this the strongest group. Non-cash expenses should also be considered when reading the gap between profit and cash.
Balance sheet 64/100: The current ratio was 1.71 and net debt/free cash about 1.0 times. Interest coverage of 6.4 times is adequate, but receivables or inventory growing 12.8 points faster than sales needs monitoring.
Shareholder policy 20/100: Stock compensation was 11.8% of revenue and the approximate SEC-based earnings multiple 159 times. Much of the share-count jump relates to shares issued for VMware, but the economic effect on existing owners is real. Dividends and repurchases equalled about 50.5% of free cash flow.
Critical combinations
- AI demand + high operating margin
- Software revenue + strong free cash
- Growing revenue + manageable net debt
- High valuation + high expectations
- Stock compensation + dilution
- Customer concentration + AI-order volatility
Q2 FY2026 current context
Broadcom increased Q2 FY2026 revenue by 48% year on year to $22.19 billion. GAAP net income was $9.31 billion and free cash flow $10.26 billion. The company reported AI semiconductor revenue of $10.8 billion, up 143% year on year.
This acceleration is current business context and is not included in the FY2025 score. The year-on-year comparison should be read alongside customer-order timing and the company's disclosed customer concentration.
Broadcom combines exceptional profitability and cash generation with AI and software. The long-term test is whether growth remains sustainable despite high expectations, customer concentration, debt and shareholder costs. This is not investment advice.
Where the figures come from
- Broadcom FY 2025 Form 10-K, SEC — fiscal year ended 2 November 2025; primary score source.
- Broadcom Q2 FY2026 Form 10-Q, SEC — interim period ended 3 May 2026.
- Broadcom Q2 FY2026 results — official current context; not included in the FY2025 score.
- Free cash flow is operating cash flow less property and equipment expenditure. Approximate valuation is not a live-price measure. Measure scores are capped at their assigned maximum weights.