Instead of arguing with other people's answers in the comments I thought it might be more productive to present my own point of view. I find myself completely unable to understand why anyone would take off points for this student's answer.
Just to be clear, this isn't because I'm being somehow lax or generous as a grader. My opinion is that this is a model solution to the problem, written clearly and well, and I can imagine writing exactly what this student wrote as part of homework solution or exam solution that I distribute to a class. In the context of Calculus I, it's also how I would do this problem on the board during class if a student asked me about it.
On the Status of Infinity
Some of the other calculus teachers here have mentioned that they teach their students that "infinity isn't a number".
I find this statement very strange, and I suppose that my position is that infinity is a number. It certainly isn't a real number, since it's not included in the usual real number system. But neither is the imaginary unit $i$, and I don't think many people would argue that $i$ isn't a number. The number $i$ is included in the system of complex numbers, and the number $\infty$ is included in the system of extended real numbers, which is the set $\mathbb{R}\cup\{-\infty,\infty\}$. I don't see the difference.
Of course, there's no standard definition of "number" in mathematics, so there's no objective truth either way. This is part of why it strikes me as so odd that a teacher would say that "$\infty$ isn't a number".
It's possible that what they mean is that "you can't do arithmetic with $\infty$". But of course you can do arithmetic with $\infty$. For example,
$$
\infty + \infty = \infty,\qquad \infty \cdot \infty = \infty,\qquad\text{and}\qquad 3\cdot \infty = \infty.
$$
These definitions are absolutely standard in mathematics, and I would feel free to use them in a conference talk or journal article without comment. I would hope that most calculus students would know how to do basic arithmetic with $\infty$ by the end of a first calculus course, but apparently this varies by instructor.
There are also arithmetic operations involving $\infty$ that are undefined, such as
$$
\infty - \infty,\qquad \frac{\infty}{\infty},\qquad\text{and}\qquad 0\cdot\infty.
$$
The last is sometimes defined to be zero (e.g. in the theory of Lebesgue integration), but in the context of calculus it's better to leave it undefined.
As far as I know, all of this is completely standard, and in my experience arithmetic involving $\infty$ and $-\infty$ is commonly used by mathematicians without further explanation or comment. I've seen lots of examples of this, but to cite a specific one it's certainly the case that Rudin's Real & Complex Analysis textbook (an extremely standard choice for a graduate analysis course) uses the extended real number system throughout.
On the Student's Answer
The student's answer depends primarily on the following theorem
Theorem. Let $f\colon \mathbb{R}\to\mathbb{R}$ and $g\colon\mathbb{R}\to\mathbb{R}$ be functions, and let $a\in [-\infty,\infty]$. If
$$
\lim_{x\to a} f(x) = L\qquad\text{and}\qquad \lim_{x\to a} g(x) = M
$$
for some $L,M\in[-\infty,\infty]$ and the product $LM$ is defined, then
$$
\lim_{x\to a} f(x)\,g(x) = LM.
$$
This is a well-known and standard theorem in analysis. In the context of this theorem, the student's work constitutes a perfectly good proof of the fact that
$$
\lim_{x\to\infty} \bigl(x-\sqrt{x}\bigr) = \infty.
$$
It is no more or less correct than something like
$$
\lim_{x\to 0} \frac{x\sin x + 2 \sin x}{x} = \lim_{x\to 0} \,\bigl(x+2\bigr)\!\left(\frac{\sin x}{x}\right) = (2)(1) = 2.
$$
I don't see why this proof would require any more explanation or rigor, in either a calculus or real analysis course, and I feel the same way about the student's proof. I suppose it might be reasonable for an analysis professor to always require students to cite the theorems that they are using, as opposed to using theorems implicitly as part of a calculation. I certainly don't think this would be a reasonable requirement for student answers in a calculus course.
Should we teach arithmetic with infinity to calculus students?
I do, and I would certainly hope that most other calculus instructors do as well. Dealing with the concept of infinity is a major theme of calculus, and the rules for arithmetic involving infinity ultimately derive from the idea of a limit. How does it help to avoid talking about this?
Actually, it seems to me that it would be difficult to cover the idea of an "indeterminate form" without covering this material. I guess at least some of the teachers here manage to avoid saying that "infinity plus infinity equals infinity" by always saying "the sum of two quantities that are both approaching infinity again approaches infinity", but what's the purpose of being so obtuse? If there's a simple way to say something, just say it that way.
And in any case, the reality is that you can do arithmetic with infinity. Saying that $\infty+\infty$ is undefined or indeed anything other than $\infty$ is just wrong, both at an intuitive level and from the point of view of standard notation and terminology. Students will figure out that it's true on their own, and will try to guess what other arithmetic rules you're not telling them. If you tell students that $\infty + \infty$ isn't $\infty$, you lose your credibility, and they won't believe you later when you tell them that $\infty - \infty$ isn't $0$.
Okay, but should we mark the student wrong?
Even if you don't talk about arithmetic involving infinity in your calculus class, the fact remains that it is absolutely standard mathematical notation. Students often seek help from mathematics tutors, other math professors, online videos, and so forth, and any one of those sources might be teaching your students about how to use infinity in this fashion. Can you really justify deducting points from students who don't write their mathematics the way that you want it written? I feel like one of the most basic principles of grading is that correct answers should receive full credit, unless the answer explicitly violates the instructions for the question. This student's answer is completely correct, and in my opinion giving it anything less than 5/5 is just arbitrary and unfair.