Can AVGO sustain its EPS growth beyond 2025?

Broadcom's (AVGO) impressive EPS growth of 307.14% in 2025Q1, driven by AI adoption and high-speed connectivity demand, raises the question of its sustainability beyond 2025. Here's an analysis to assess the likelihood of sustaining this growth: 1. **Growth Drivers**: - Broadcom's AI-related revenue surged by 77% year-over-year, reaching $4.1 billion. Hyperscaler investments in data center capacity and Broadcom's leadership in AI infrastructure suggest continued growth potential. - The company's networking solutions and semiconductor segments, though showing mixed results, have opportunities in enterprise spending and data center expansion. 2. **Financial Health and Efficiency**: - Broadcom's gross margins expanded to 68%, with adjusted EBITDA reaching $10.1 billion. Strong profitability indicators suggest efficient operations, supporting sustained growth. - The company's strong Altman Z-Score of 6.35 and Beneish M-Score of -2.29 indicate robust financial health and a low risk of bankruptcy. 3. **Market Position and Strategy**: - Broadcom's diversified business portfolio and focus on high-margin businesses position it well for long-term growth. - Strategic acquisitions and investments in next-gen AI accelerators and networking technology are expected to support sustained innovation and market leadership. 4. **Valuation and Insider Activity**: - The stock's high P/E ratio and recent insider selling activities suggest caution for investors assessing long-term sustainability. - However, the company's history of strategic moves and strong financial performance provide a positive backdrop for continued growth efforts. In conclusion, while Broadcom's strong EPS growth in 2025Q1 is impressive, sustaining this growth will depend on managing valuation expectations, maintaining operational efficiency, and continuing to innovate in high-growth markets like AI and data center technologies. The company's financial health, market position, and strategic focus offer a positive foundation, but investors should monitor key performance indicators and market conditions closely beyond 2025.