Key Drivers of the AVGO Earnings
- Broadcom (AVGO) gained 16% in after-hours trading during its live Q3 2025 earnings call
- A strong Q3 earnings beat drove the move, with EPS of $1.69 vs $1.65 estimate and AI revenue acceleration
- Heavy call option activity and bullish analyst upgrades supported the rally
AVGO surged on Thursday following third-quarter earnings that beat expectations on both revenue and earnings per share. The company reported adjusted EPS of $1.69 versus the $1.65 estimate, with revenue of $15.95B beating the $15.83B consensus.
Management provided strong Q4 guidance of $17.4B in sales versus the $17.02B estimate, with consolidated backlog hitting a record $110B. The AI segment showed particular strength with one customer securing over $10B in AI racks, while management expects the fiscal 2026 AI revenue outlook to improve significantly.
AVGO Unusual Options
The options market showed heavy bullish activity with over 180 unusual options trades on September 4th. Notable activity included large call purchases in the $305-$320 strike range expiring September 5th, with premium flows exceeding $100K on multiple trades. Long-dated call activity in 2026 and 2027 strikes suggests sustained optimism about the AI story, including a $545K trade on March 2026 $400 calls.
Analyst Focus
Recent analyst upgrades supported the positive sentiment. Morgan Stanley raised their price target from $338 to $357 on September 2nd while maintaining Overweight. UBS increased its target from $290 to $345 on August 25th, and Oppenheimer lifted its target from $305 to $325 on August 28th.
AVGO Seasonality
Based on data since September 2020 (6 samples), September shows mixed seasonal performance with only 50% positive periods and an average gain of +0.8%. However, AVGO historically shows strong performance in November (80% positive, +8.4% average) and December (100% positive, +18.8% average), suggesting potential for continued strength heading into year-end.
AVGO Relative Performance
AVGO’s relative performance versus the SPX has declined from July highs near the 99th percentile to the 83rd percentile as of September 3rd. While still outperforming most S&P 500 stocks, the recent underperformance trend reversed with Thursday’s earnings-driven rally.
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