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Investing.com -- Moody’s Ratings has upgraded Broadcom Inc.’s senior unsecured rating to A3 from Baa1 and changed the outlook to positive from stable, citing the company’s strengthening business profile driven by growth in artificial intelligence semiconductor revenues.
The ratings agency also upgraded Broadcom Technologies Inc.’s backed senior unsecured rating to A2 from A3 and assigned an A3 rating to Broadcom’s proposed senior unsecured notes offering. Broadcom’s backed commercial paper program rating was affirmed at P-2.
"We expect Broadcom’s revenue growth to accelerate from 23% in fiscal year ending November 2025, to 36% in FY ’2026, and free cash flow (after dividends) to increase from $17 billion in FY ’2025, to $29 billion in FY 2026," said Moody’s Senior Vice President Raj Joshi.
Joshi added that quarterly revenues from AI computing and networking products have surpassed revenues from the company’s heritage semiconductor businesses, with annual AI revenues expected to double year-on-year in FY 2026.
The upgrade reflects Broadcom’s diverse revenue mix from infrastructure software and semiconductor solutions, along with its track record of generating solid profitability and high revenue-to-free cash flow conversion.
Moody’s noted that Broadcom has made significant progress in converting VMWare’s largest enterprise customers from perpetual software licenses to recurring subscription services. The company’s infrastructure software segment operating margins are on track to increase by about 12 points year-over-year in FY 2026.
Total debt to EBITDA is expected to decline to below 1.5x by FYE 2026, from about 3x at FYE 2024, assuming modest debt paydown.
Broadcom’s strong liquidity position includes $10.7 billion of cash balances as of August 3, 2025, access to a $7.5 billion revolving credit facility, and projected free cash flow of $29 billion in FY 2026.
Despite high concentration of AI semiconductor revenues among certain hyperscalers and developers of large language models, Moody’s believes potential risks are mitigated by Broadcom’s robust financial profile and high end-market diversity.
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