Broadcom stock plunges 10% despite crushing earnings as AI chips drive revenue to $18B

Broadcom reports fourth quarter earnings after the bell

A Broadcom sign is pictured as the company prepares to launch new optical chip tech to fend off Nvidia in San Jose, California, U.S., September 5, 2025. Broadcom is scheduled to report its fourth-quarter earnings after market close on Thursday. Here's what analysts are expecting, according to LSEG: Wall Street is expecting Broadcom's overall revenue to increase 25% in the quarter ended in October, from $14.05 billion a year earlier. Analysts are expecting the chipmaker to guide for $1.95 in adjusted earnings per share on $18.27 billion in sales in the current quarter. The report comes as investors increasingly see Broadcom as well-placed to capitalize on the AI infrastructure boom both with its custom chips, which it calls XPUs, and the networking technology needed to build massive data centers where thousands of AI chips work as one. Broadcom stock is at all-time highs and has climbed 75% so far in 2025 as its custom chips, such as Google's tensor processing units, are increasingly seen as a rival to Nvidia's AI chips. The company has a market cap of $1.91 trillion. Google released its latest AI model, Gemini 3, during the quarter, which it said was trained entirely on its TPU chips. Another Broadcom AI customer is OpenAI. The AI startup said in October that it will start deploying custom chips for AI developed with Broadcom starting next year. Broadcom CEO Hock Tan is expected to discuss the company's pipeline of AI chips and partners with investors on Thursday. "We expect investors to focus on FY26 AI revenue guidance, Google and OpenAI revenue contributions, and gross margin trajectory given the steep ramp of custom XPUs," Goldman Sachs analyst James Schneider wrote in a note last month. He has the equivalent of a buy rating on the stock.

Broadcom's stock falls despite another crushing earnings and revenue beat - SiliconANGLE

Broadcom's stock falls despite another crushing earnings and revenue beat Chipmaking giant Broadcom Inc. posted another stellar earnings and revenue beat as it delivered its fourth-quarter financial results, before following up with strong guidance driven by the market's insatiable demand for artificial intelligence processors. The company reported earnings before certain costs such as stock compensation of $1.95 per share, easily beating the analyst consensus estimate of $1.86. Revenue for the period jumped by an impressive 28% to $18.02 billion, well ahead of the $17.49 billion forecast. On a conference call, Broadcom Chief Executive Hock Tan (pictured) said the company's growth was driven by a 74% increase in sales of AI chips, which added around $8.2 billion in additional sales. That increase provided a considerable boost to the company's profitability, too, with net income rising 97% to $8.51 billion in the quarter, up from $4.32 billion one year ago. For the current quarter, Broadcom anticipates revenue of around $19.1 billion at the midpoint of its guidance range, higher than the $18.3 billion forecast by Wall Street analysts. Tan said the company expects AI chip sales to reach $8.2 billion during the quarter, more or less double the total from the same period last year. After Nvidia Corp., Broadcom is probably the biggest beneficiary of the AI industry boom. Its stock has gained more than 75% in the year to date, though strangely, it declined more than 6% in the wake of today's results. The chipmaker doesn't compete directly with Nvidia, which is known for its graphics processing units. Instead, it helps companies to develop and design so-called "custom AI chips", such as Google LLC's tensor processing units. Custom chips are increasingly getting traction in the AI market as an alternative to Nvidia's GPUs, which have been in short supply for some time already. Their popularity stems from their architecture, which differs from GPUs. Whereas GPUs are widely seen as general purpose chips, Google's TPUs and other custom silicon are "application-specific integrated circuits" or ASICs, which can be customized for very specific workloads, enabling companies to squeeze higher performance out of them in some use cases. On a conference call with analysts, Tan said the company has now acquired a fifth customer for its custom chips. He didn't name that latest customer, but said it has placed a $1 billion order that's expected to be delivered towards the end of calendar 2026. On the other hand, Tan did reveal that the AI startup Anthropic PBC is the previously unnamed client that ordered $10 billion worth of Google's TPUs during the prior quarter. He also revealed that Anthropic is one of the first companies to start using Google's latest Ironwood TPU. That suggests encouraging progress for Broadcom. In its last earnings report three months ago, the company said it had just three customers it was working with to develop and produce custom AI chips, in addition to four "prospects", so two of them have now been made official. One of those prospects is OpenAI Group PBC. In October, the company confirmed it's working with the ChatGPT developer to design custom chips that will run its GPT family of large language models. Discussing the appeal of custom AI chips, Tan explained that many AI companies would "prefer to control their own destiny by continuing to drive their multiyear journey to create their own custom AI accelerators, or XPUs as well call them." All told, Broadcom now has a backlog of orders for custom AI chips and other data center components, such as networking chips, that totals a staggering $73 billion, Tan said. He added that the company hopes to turn this into revenue within 18 months. Futurum analyst Daniel Newman told the Wall Street Journal he's expecting the entire AI chips market, including custom accelerators and Nvidia's GPUs, to grow by around $1 trillion a year in the next few years. Custom chips should account for between 25% and 30% of the market, he added. Broadcom is likely to sell around 70% to 80% of all custom chips because very few rivals can compete with it in designing custom silicon. Its biggest competitor is Marvell Technology Inc., which notably helps AWS develop its Trainium AI accelerators, but it has been unable to match Broadcom's traction. "People used to talk about how software was going to eat the world, but now semiconductors are eating the world, and Broadcom has really just mastered the class of custom silicon for AI," Newman said. "This market is only going to get bigger, and all these AI companies are only going to need more chips." Broadcom reports AI chip sales within its semiconductor solutions business unit, which generated $11.07 billion in revenue during the quarter, up 22% from a year earlier. The segment also includes traditional chips used in cars and other gadgets. The company's other major business unit, infrastructure software, delivered $6.94 billion in sales during the quarter, up 26% from a year earlier.

Broadcom's AI Business Is Growing Fast. Here's Why the Stock Is Tanking Anyway.

Investors have scrutinized tech earnings more intensively in recent months amid concerns Silicon Valley is overspending on AI. Broadcom's custom AI chip business is growing rapidly. Wall Street, however, is wary about how much upside that growth suggests. Broadcom (AVGO) on Thursday predicted its AI-related revenue will double year-over-year to $8.2 billion in the current quarter. That would be an acceleration from the most recent quarter, when it grew 74% to $6.5 billion. But the forecast came with a caveat -- and that weighed on the shares today. The stock was recently down about 10% in intraday trading. Broadcom expects its gross margin to contract 100 basis points, or 1 percentage point, quarter-over-quarter, "primarily reflecting a higher mix of AI revenue," said chief financial officer Kirsten Spears on a call with analysts Thursday night. The notion that higher AI sales might be a drag on profitability wasn't what investors wanted to hear. But investors have lately upped their scrutiny of tech earnings due to concerns about stretched stock valuations and unsustainable infrastructure spending, meaning that even good news is getting put under a microscope. That's led to less-than-rollicking market responses to corporate results. Nvidia (NVDA), the leading supplier of AI chips and Broadcom's largest competitor, blew past estimates with its numbers last month, but its stock slumped under the weight of AI bubble concerns. Software giant Oracle (ORCL) on Wednesday said its backlog now exceeds $500 billion, but it failed to convince investors that its huge AI investments will pay off soon. Its stock slumped yesterday to lead an AI sell-off. Broadcom, meanwhile, isn't the only tech company whose profitability is being pressured by AI. In October, Oracle forecast its AI cloud infrastructure business would achieve gross margins between 30% and 40%, roughly half that of its legacy software business. This year's AI-driven rally has also set a high bar for tech earnings. Heading into Thursday's results, Broadcom shares were up 75% since the start of the year. The stock rose about 20% in the past month alone thanks to Google's newest AI model, which was trained on Broadcom-designed chips and lauded as a serious challenger to OpenAI's ChatGPT. Bank of America analysts in a note Friday called Wall Street's worries about profitability a "fair concern." They lowered their 2026 and 2027 margin estimates by a couple percentage points. Nevertheless, they raised their earnings estimates for those same years, reflecting their belief that faster revenue growth will more than offset narrowing margins. Deutsche Bank analysts made the same adjustments, and raised their share price target.

AI giant Broadcom stock falls 5% -- Why are Broadcom shares dropping; is Oracle to blame?

Broadcom stock falls 5%: Broadcom stock fell nearly 5% in pre-market trading on Friday. The company warned that its margins will decline due to a rising share of AI-related revenue. The update added fresh pressure to a tech market already shaken by cooling investor enthusiasm for artificial intelligence. Broadcom Inc. (AVGO) reported another record-breaking year, with consolidated revenue reaching $64 billion in fiscal 2025, a strong 24% year-over-year increase. The company's explosive momentum was powered largely by its AI business, where revenue surged 65% to $20 billion, solidifying Broadcom's position as one of the biggest beneficiaries of global AI infrastructure spending. Semiconductor revenue for the year rose to $37 billion, with Q4 alone delivering $11.1 billion, up 35% from last year. Infrastructure software also remained a reliable growth engine, contributing $27 billion for the year and $6.9 billion in Q4, boosted by wide adoption of VMware Cloud Foundation. Broadcom closed the fourth quarter with $18 billion in total revenue, up 28% year over year, along with adjusted EBITDA of $12.2 billion, reflecting 34% growth. The company reported a healthy 77.9% gross margin, $11.9 billion in operating income, and $7.5 billion in free cash flow, representing 41% of quarterly revenue. Cash and equivalents stood at $16.2 billion entering fiscal 2026.Looking ahead, Broadcom issued strong guidance. The company expects $19.1 billion in Q1 fiscal 2026 revenue, a 28% year-over-year rise. AI semiconductor revenue is projected to hit $8.2 billion, roughly doubling from last year as demand for custom accelerators and networking solutions accelerates across hyperscalers. Broadcom also raised its annual dividend by 10% to $2.60 per share, citing its robust cash-generation profile. The drop comes as several trillion dollars in tech valuations have weakened since late October. Many investors are now questioning how quickly major AI investments will translate into profits. The broader sentiment weakened further after Oracle reported heavy AI spending and softer forecasts. That forced another selloff across big tech on Thursday. Yet some analysts say the fear is overdone. "Spending intentions remain huge. Hitting the panic button is premature," said Ben Reitzes of Melius Research. Broadcom's stock fell about 5% even after the chipmaker posted strong fiscal Q4 results and upbeat AI guidance. The reaction was driven less by demand concerns and more by expectations, margins, and a market priced for perfection. The company beat revenue and EPS estimates and reported sharp year-over-year growth in AI semiconductor sales. Broadcom also guided above consensus for Q1, projecting about $19.1 billion in revenue and adjusted EBITDA at 67% of revenue. AI chip revenue is expected to double YoY to $8.2 billion in the upcoming quarter. Yet the stock reversed from an early after-hours jump to a steep decline as investors heard more detail on profitability. The message that AI systems and racks -- now a larger share of Broadcom's mix -- carry lower gross margins than custom chips became a key reason for the sell-off. With the stock sitting near all-time highs and priced at a demanding multiple, anything short of massive upside triggered "sell the news" reactions. Broadcom recently disclosed that its gross margins will experience fluctuations throughout the fiscal year, primarily due to shifting revenue mixes across key segments like infrastructure software, networking solutions, and high-performance semiconductors. Despite this, the company maintains a robust $73 billion order backlog, fully scheduled for delivery over the next 18 months, providing clear visibility into sustained revenue streams. Morningstar analysts downplay the recent stock selloff, attributing it to investor worries over gross margin dilution from ramping up production of next-generation AI chips. They counter that these AI accelerators not only enhance operating margins through premium pricing but also fortify Broadcom's competitive edge, ultimately driving higher overall profitability and positioning the firm as a leader in the exploding AI infrastructure market amid 2025's tech rally. Broadcom is riding high on surging demand for its custom AI processors, carving out a significant and growing presence in the data center arena traditionally ruled by Nvidia's dominance. The company's shares have surged nearly 75% year-to-date, reflecting investor confidence in its pivot toward AI-driven growth amid broader semiconductor volatility. In its latest fourth-quarter earnings, Broadcom surpassed Wall Street's revenue forecasts by a wide margin and guided for first-quarter sales of approximately $19.1 billion -- well ahead of the consensus estimate of $18.27 billion. This outperformance underscores Broadcom's ability to capture market share in custom silicon, with analysts projecting continued double-digit revenue growth fueled by hyperscale contracts and the global AI boom. Broadcom plays a pivotal role in powering the AI revolution by designing and manufacturing cutting-edge custom processors tailored for industry giants like Google Cloud and Meta Platforms. These specialized chips offer a compelling alternative to Nvidia's ubiquitous GPUs, enabling hyperscalers to diversify supply chains, mitigate risks from single-vendor dependency, and optimize costs for massive AI workloads. U.S. cloud providers, including Amazon Web Services, Microsoft Azure, and others, are forecasted to pour over $400 billion into AI infrastructure this year alone, with the bulk earmarked for expansive data center builds. These facilities are engineered to handle the immense computational demands of frontier AI models like OpenAI's ChatGPT, Google's Gemini, and Anthropic's Claude, setting the stage for Broadcom to reap billions in recurring revenue as AI adoption scales across enterprise and consumer applications. Broadcom closed at $406.96 on December 12, 2025, down 1.46%, with earlier intraday declines nearing 5%. The day's trading range spanned $394 to $409, reflecting elevated volatility. Volume surged to 26.6 million shares, well above the 22.9 million average, showing heavy institutional repositioning. Even after the drop, Broadcom holds a $1.91 trillion market cap and trades at a P/E ratio of 104.89, underlining the rich valuation that magnified the market's reaction. The stock remains well above its 52-week low of $138 and only slightly off its high of $414.61. Technical indicators show support around the 50-day moving average at $360, which traders may watch if selling deepens. Analyst sentiment still signals long-term confidence, with most ratings in "Strong Buy" territory. The average price target near $372 -- below the current price -- reflects both the stock's premium valuation and the belief that earnings strength is already well reflected in the share price. Broadcom's next earnings update, expected in mid-to-late March 2026, will likely center on margins, backlog quality, and AI system mix. For now, the post-earnings drop looks more like an expectations reset than a challenge to Broadcom's core AI growth story.

Broadcom's 50‑Year Playbook Gets A Radical Rewrite -- Thanks To OpenAI, Google, Meta - Broadcom (NASDAQ:AVGO)

Broadcom Inc (NASDAQ:AVGO) just pulled off the most lucrative "quiet pivot" in Silicon Valley -- and the market almost missed it while obsessing over a routine 5% dip. Track AVGO stock here. The company that spent half a century being defined by switches, routers and networking silicon is now being redefined by three clients who don't even bother pretending they're anything short of AI superpowers: OpenAI, Alphabet Inc.'s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google and Meta Platforms Inc (NASDAQ:META). AI Custom Chips Take The Wheel The milestone slipped into the earnings print with zero theatrics: custom AI accelerators officially overtook traditional networking as Broadcom's No. 1 revenue line. That single crossover rewires the company's entire growth story. Broadcom isn't selling commodity infrastructure anymore; it's building bespoke silicon for the three companies racing to dominate AI compute. For a firm long cast as the plumbing of the internet, becoming Big Tech's custom-chip confidant is a narrative upgrade no analyst model was calibrated for. Read Also: Nvidia's Empire Just Took A Hit - Broadcom's $10 Billion Deal Is The Plot Twist The Most Profitable Relationship Status Change In Tech Networking hasn't disappeared -- it's just become the ex who still texts but no longer shapes the future. AI accelerators, with their multi-year contracts and hyperscale capex tailwinds, are now the center of gravity. Broadcom has effectively become the high-margin, low-drama alternative to building your own chip team from scratch. And when your new partners collectively operate the largest AI clusters on Earth, the upside math tilts aggressively in your favor. Wall Street Needs A New Lens The Street's fixation on near-term volatility overlooks the larger structural shift: Broadcom's business model no longer hinges on enterprise spending cycles or telco digestion. Its fortunes are now tethered to the fastest-growing compute buildout in history. Nvidia Corp (NASDAQ:NVDA) may define the AI era, but Broadcom is quietly emerging as the custom silicon tailor, fitting the industry's power players. Broadcom didn't reinvent itself overnight. It simply upgraded its playbook -- and its new collaborators just happen to be the ones writing the future of AI. Read Next: AI Spending Is Shifting -- And Broadcom, Marvell Are Positioned To Win Image created using artificial intelligence via Gemini. AVGOBroadcom Inc$361.87-10.9%OverviewGOOGAlphabet Inc$314.59-1.64%GOOGLAlphabet Inc$307.25-1.66%METAMeta Platforms Inc$643.70-1.38%NVDANVIDIA Corp$177.50-1.90%Market News and Data brought to you by Benzinga APIs

Broadcom outlines $19.1B Q1 2026 revenue target as AI backlog surges to $73B (NASDAQ:AVGO)

Earnings Call Insights: Broadcom Inc. (AVGO) Q4 2025 Management View * Hock Tan, President, CEO & Executive Director, reported, "In our fiscal 2025, consolidated revenue grew 24% year-over-year to a record $64 billion, and it's driven by AI semiconductors and VMware. AI revenue grew 65% year-over-year to $20 billion, driving the semiconductor revenue for this This article was automatically generated by an AI tool based on content available on the Seeking Alpha website, and has not been curated or reviewed by humans. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of such articles cannot be guaranteed. This article is intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Broadcom's $73 billion AI backlog supports strong revenue growth over the next 18 months, making AI the primary driver of expansion. AI revenue growth is expected to lower gross margins due to product mix but increase operating margin dollars through higher operating leverage. Broadcom invests in a new Singapore packaging facility to strengthen advanced packaging and supply chain resilience as AI orders accelerate.

Broadcom Q4 Preview: After 74% Surge in 2025, Can Earnings Keep Rally Alive? - Broadcom (NASDAQ:AVGO)

Semiconductor giant Broadcom Inc (NASDAQ:AVGO) could highlight surging demand for artificial intelligence chips when the company reports fourth-quarter financial results Thursday after market close. * Broadcom stock is at critical resistance. Why did AVGO hit a new high? Here are the earnings estimates, what analysts are saying ahead of the results and the key items to watch. Earnings Estimates: Analysts expect Broadcom to report fourth-quarter revenue of $17.49 billion, up from $14.05 billion in last year's fourth quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in three straight quarters and in eight of the past 10 quarters overall. Broadcom has also posted 10 straight record quarters for revenue with the amount getting higher each report. The current estimate would set a new record once again for an 11th straight quarter. Analysts expect Broadcom to report fourth-quarter earnings per share of $1.86, up from $1.42 in last year's fourth quarter. The company has beaten analyst estimates for earnings per share in three straight quarters and in nine of the past 10 quarters overall. Guidance from the company calls for fourth-quarter revenue of $17.4 billion. Read Also: Nancy Pelosi And Dan Ives Pile Into The Same 8 AI Stocks -- What Do They See Coming? What Analysts Are Saying: Analysts have been increasing their price targets and providing bullish takes on Broadcom ahead of the quarter. JPMorgan analyst Harlan Sur sees the company reporting stronger-than-expected fourth quarter results thanks to demand for AI-related products and improvements in the non-AI semiconductor sector. The analyst maintained an Overweight rating on Broadcom ahead of the results. Sur's estimate is for AI revenue to be between $6.5 billion to $6.7 billion of quarterly revenue of around $17.5 billion. The analyst expects Broadcom to report strong first-quarter guidance with estimates of $19 billion for overall revenue and $8 billion for AI revenue. Partnerships with companies like Google could help the company going forward, according to BofA Securities analyst Vivek Arya. Arya reiterated a Buy rating on Broadcom ahead of the report and raised the price target from $400 to $460. The analyst sees strong demand from Google, Anthropic and Meta expanding and helping to power guidance and future results. Arya said Broadcom is well-positioned for increased AI-related spending. Here are other recent analyst ratings on Broadcom and their price targets: Rosenblatt: Maintained Buy rating, raised price target from $400 to $440 Oppenheimer: Maintained Outperform rating, raised rice target from $400 to $435 Susquehanna: Maintained Positive rating, raised price target from $400 to $450 Morgan Stanley: Maintained Overweight rating, raised price target from $409 to $443 Key Items to Watch: Broadcom shares have soared in 2025 and the company may need to report a beat and strong guidance to keep momentum going. A recent report links Microsoft to work with Broadcom on custom AI chips, which would see the tech giant move business from Marvell to Broadcom. In the AI-chip space, Broadcom has been winning deals with some of the biggest companies, which could help provide bullish commentary from management and strong guidance. Broadcom's third quarter saw AI revenue of $5.2 billion, which was up 63% year-over-year. Analysts see the AI revenue continuing to climb going forward. Broadcom's own estimate is for fourth quarter AI revenue of $6.2 billion. Broadcom's quarterly results could put the spotlight on the entire semiconductor sector. The stock is the largest holding in the iShares Semiconductor ETF (NASDAQ:SOXX) at 8.42% of assets, even ahead of Nvidia due to the stock surge this year. A strong report from Broadcom could boost other semiconductor stocks and ETFs going forward. AVGO Price Action: Broadcom stock is up 0.24% to $407.26 on Wednesday at publication versus a 52-week trading range of $138.10 to $407.28. Broadcom shares are up 73.7% year-to-date in 2025. Read Next: Forget Meta And Microsoft -- 'Pick And Shovel' Stocks Are The AI 'Capex Super Boom' Play AVGOBroadcom Inc$408.430.53%OverviewSOXXiShares PHLX SOX Semiconductor Sector Index Fund$314.000.58%Market News and Data brought to you by Benzinga APIs

Broadcom Pulls Back as Strong Earnings Fail to Match AI Growth Expectations | Investing.com UK

Broadcom (NASDAQ:AVGO) shares tumbled approximately 4.92% in premarket trading on December 12, 2025, falling to $386.36 as of 5:19:43 AM EST, after closing at $406.37 the previous day. The sharp decline came despite the semiconductor giant reporting strong fourth-quarter earnings that beat analyst estimates, with revenue reaching $18.015 billion and adjusted earnings per share of $1.95. The stock reversal followed CEO Hock Tan's conference call commentary that failed to satisfy investors' elevated expectations for the company's artificial intelligence business growth trajectory. Broadcom delivered impressive fourth-quarter results, with revenue of $18.015 billion representing a 28% year-over-year increase, primarily driven by a 74% surge in AI semiconductor revenue. The company posted GAAP net income of $8.518 billion and non-GAAP net income of $9.714 billion for the quarter, exceeding analyst expectations. For the first quarter of fiscal 2026, Broadcom guided revenue to approximately $19.1 billion, above the $18.5 billion analyst consensus, and projected adjusted EBITDA of 67% of revenue. However, investors were disappointed by CEO Hock Tan's cautious commentary during the earnings call. He disclosed that the company has a backlog of $73 billion in AI product orders to be shipped over the next six quarters, a figure that some investors found underwhelming given the company's momentum. Tan sought to clarify that this was a "minimum" figure and expected "much more as more orders come in," but the lack of concrete 2026 AI revenue guidance left the market wanting more. His statement that it's "hard for me to pinpoint what '26 is going to look like precisely" added to investor uncertainty. Adding to investor concerns, CEO Tan warned that total margins were narrowing due to AI product sales, despite the company's strong overall performance. The announcement of an $11 billion order from AI startup Anthropic in the fourth quarter, following a $10 billion deal in the third quarter, demonstrated robust customer demand. Additionally, Broadcom signed another customer order worth $1 billion, though the client was not identified. While Tan stated that AI semiconductor revenue would double to $8.2 billion in the first quarter compared to the prior year, driven by custom AI accelerators and Ethernet AI switches, the margin pressure commentary tempered enthusiasm. The market reaction reflected a broader challenge for high-flying AI stocks: meeting increasingly lofty expectations. Broadcom's year-to-date return of 76.53% had significantly outpaced the S&P 500's 17.33% gain, and the stock had surged 123.99% over the past year. With a market capitalization of $1.919 trillion and a forward P/E ratio of 43.29, investors had priced in substantial growth expectations. The company's decision to increase its quarterly dividend by 10% to $0.65 per share and its strong free cash flow of $26.9 billion for fiscal 2025 were overshadowed by the uncertain AI revenue trajectory and margin dynamics that emerged from the earnings call. *** Looking to start your trading day ahead of the curve?

Broadcom reports upbeat guidance, sees Q1 chip revenue doubling amid AI boost By Investing.com

Investing.com - Broadcom on Thursday reported upbeat guidance for the current quarter, forecasting AI-chip revenue to doubled in Q1 from a year earlier just as the chipmaker delivered fiscal fourth-quarter results that topped Wall Street estimates. Broadcom Inc (NASDAQ:AVGO) jumped more than 3% in afterhours following the report. First quarter revenue was guided to about $19.1B, beating analyst estimates $18.31B. "We see the momentum continuing in Q1 and expect AI semiconductor revenue to double year-over-year to $8.2 billion, driven by custom AI accelerators and Ethernet AI switches," the company said. Broadcom announced fiscal Q4 adjusted earnings per share of $1.95 on revenue of $18.02 billion. Analysts polled by Investing.com anticipated EPS of $1.87 on revenue of $17.45 billion. The beat on top and bottom lines comes as AI semiconductor jumped to $8.3B, beating the company's previously provided guidance of $6.2B. Semiconductor solutions, its core business, rose 35% to $11.07B, while infrastructure software added 19% to $6.94B.

Broadcom sees dip in quarterly margins due to AI, shares fall

Dec 11 (Reuters) - Broadcom projected first-quarter revenue above Wall Street estimates on Thursday, but said that margins would fall due to a higher mix of AI revenue, and shares fell 5% in extended trading. Broadcom has jumped into the AI chip business, which has investors nervous about the profitability and costs of enormous investments. The company has a backlog of $73 billion that it anticipates shipping over the next 18 months, CEO Hock Tan said on a post-earnings call, but his lieutenant said profit margins could drop. "We expect first-quarter consolidated gross margin to be down approximately 100 basis points sequentially, primarily reflecting a higher mix of AI revenue," CFO Kirsten Spears said on the call. The margins will be affected throughout the year by the revenue mix of infrastructure, software and semiconductors. Broadcom's AI customer concentration, coupled with future lower margins for AI system sales, drove the drop in shares, according to Kinngai Chan, senior research analyst at Summit Insights. The backlog "is still coming from only five customers and includes systems, which have a higher price tag. System sales will carry lower gross margin and ... are expected to become a larger part of total sales in the future quarters, namely the second half of fiscal 2026," he said. The decline in gross margins may raise a concern that costs related to contract chip manufacturer TSMC may squeeze the value Broadcom can realize from its custom AI processors business, according to Gil Luria, analyst at D.A. Davidson. Broadcom works with hyperscale cloud providers such as Google and Meta Platforms to design and manufacture the processors, known as ASICs, offering a key alternative to Nvidia's graphics processing units. Big U.S. cloud providers are expected to spend more than $400 billion on AI this year to build out data centers needed to support services such as ChatGPT, Copilot and Gemini. But the growing spending, limited evidence of real-world AI productivity gains, soaring valuations and a web of circular investments have stoked fears of an AI bubble. Tan said in a statement that Broadcom's AI semiconductor revenue -- encompassing both the custom chips and networking chips used in AI data centers -- is expected to double to $8.2 billion in the fiscal first quarter. Broadcom forecast quarterly revenue of about $19.1 billion, compared with analysts' average estimate of $18.27 billion, according to data compiled by LSEG. The company reported revenue of $18.02 billion for the fourth quarter ended November 2, compared with estimates of $17.49 billion. (Reporting by Juby Babu in Mexico City; Editing by Maju Samuel and Alan Barona)

Broadcom beats expectations, forecasting a surge in AI chip sales

On Thursday Broadcom posted quarterly results that topped forecasts, alongside upbeat guidance driven by sustained demand in artificial intelligence. EPS reached $1.95 for Q4, versus $1.86 expected by the LSEG consensus. Revenue reached $18.02bn, well above the projected $17.49bn. Broadcom's shares rose nearly 3% in after-hours trading. For Q1 2026, the company expects revenue of $19.1bn, well ahead of market expectations. CEO Hock Tan said sales of chips dedicated to artificial intelligence should double in a year, reaching $8.2bn. The momentum includes both specialized semiconductors for AI models and chips used in the network infrastructure essential to their operation.