Broadcom Inc. (NASDAQ: AVGO) capped fiscal 2025 with a blowout fourth quarter on December 11, posting record revenue, surging profits and bullish guidance powered by red‑hot demand for its custom AI chips and networking gear. Shares initially rose about 3% in after‑hours trading as the company beat Wall Street’s expectations on both the top and bottom line and signaled even faster growth ahead in early fiscal 2026. [1]
Key Q4 2025 earnings highlights
- Q4 revenue: $18.0 billion, up 28% year over year (YoY). [2]
- Q4 GAAP diluted EPS: $1.74, up 93% YoY. [3]
- Q4 non‑GAAP / “normalized” EPS: $1.95, up 37% YoY. [4]
- Street expectations: roughly $17.46–$17.47 billion in revenue and $1.87 in adjusted EPS – Broadcom beat on both metrics. [5]
- Semiconductor revenue: $11.07 billion, beating ~$10.73 billion consensus. [6]
- Infrastructure software revenue (incl. VMware): $6.94 billion, up 19% YoY. [7]
- AI semiconductor revenue: up 74% YoY in Q4; AI now accounts for more than half of Broadcom’s semiconductor sales. [8]
- Free cash flow: $7.47 billion in Q4, equal to 41% of revenue. [9]
- Dividend: quarterly dividend hiked 10% to $0.65 per share, marking the 15th consecutive annual increase. [10]
- Q1 FY26 guidance: revenue of about $19.1 billion (+28% YoY) and AI semiconductor revenue expected to double YoY to $8.2 billion, with adjusted EBITDA margin around 67%. [11]
Broadcom tops expectations with record Q4 and massive profit jump
In its fiscal fourth quarter ended November 2, 2025, Broadcom reported net revenue of $18.0 billion, up from $14.1 billion a year earlier, a 28% jump driven primarily by AI hardware demand and continued strength in infrastructure software. [12]
GAAP net income nearly doubled to $8.5 billion from $4.3 billion a year ago, while non‑GAAP net income climbed to about $9.7 billion from $7.0 billion. [13]
On a per‑share basis, diluted GAAP earnings came in at $1.74, compared with $0.90 last year, while non‑GAAP diluted EPS reached $1.95, up from $1.42. [14]
Those figures comfortably cleared Wall Street’s expectations. Heading into the print, analysts were looking for roughly $17.5 billion in revenue and $1.87 in adjusted EPS, according to multiple previews from Zacks, TipRanks and independent research shops. [15]
Broadcom also continued to print cash:
- Cash from operations: $7.7 billion in Q4.
- Capex: just $237 million.
- Free cash flow: $7.47 billion, or about 41% of quarterly revenue. [16]
For the full fiscal year 2025, Broadcom generated $63.9 billion in revenue, up 24% from 2024, and adjusted EBITDA of $43.0 billion, up 35% YoY, with free cash flow of $26.9 billion. [17]
Those numbers underscore just how profitable Broadcom’s AI and software mix has become.
AI chips are now Broadcom’s main growth engine
CEO Hock Tan described Q4 as a breakout quarter for AI, highlighting that AI semiconductor revenue surged 74% year over year and was the primary driver of the company’s 28% overall revenue growth. [18]
Broadcom’s AI story has a few key pieces:
- Custom AI accelerators (XPUs): Broadcom designs custom chips for hyperscale cloud customers — including Google and several large AI players — that compete with Nvidia GPUs in certain workloads.
- AI networking: Ethernet “AI switches” and optical interconnects are increasingly critical as data center clusters scale to tens of thousands of nodes. [19]
- A fourth mega‑customer: In earlier commentary, Broadcom disclosed that a fourth hyperscale customer has already placed more than $10 billion in AI rack orders, scheduled to ramp in fiscal 2026. [20]
According to 24/7 Wall St’s live coverage, AI now makes up more than half of Broadcom’s semiconductor revenue, cementing the segment as the company’s defining growth driver. [21]
The momentum isn’t slowing, either: for Q1 FY26, management forecasts AI semiconductor revenue to double year over year to about $8.2 billion, contributing to that $19.1 billion total‑revenue guidance and a hefty 67% adjusted EBITDA margin. [22]
Longer‑term AI projections are equally aggressive. An in‑depth analysis from I/O Fund notes that management’s prior guidance implied around $19.9 billion in AI revenue for FY25, up roughly 63% from about $12.2 billion in FY24, and cites Mizuho estimates calling for AI revenue to grow more than 100% in FY26 to roughly $40.4 billion. [23]
Segment performance: semiconductors vs. software (VMware)
Broadcom’s results show how balanced its business has become between chips and infrastructure software.
Semiconductor Solutions
- Q4 segment revenue: $11.1 billion, up 35% YoY.
- Represents 61% of total revenue. [24]
AI accelerators and Ethernet‑based networking silicon drove most of the acceleration, offsetting more sluggish legacy wireless and storage markets.
Infrastructure Software (including VMware)
- Q4 segment revenue: $6.94 billion, up 19% YoY.
- Represents 39% of total revenue. [25]
According to 24/7 Wall St, more than 90% of the top 10,000 VMware customers have now purchased VMware Cloud Foundation (VCF) licenses, moving the VMware acquisition firmly into its second phase: deployments and expansion, rather than license transitions. [26]
That multi‑year rollout of private‑cloud and hybrid AI‑ready infrastructure gives Broadcom a stickier, higher‑margin software revenue base to complement the AI chip boom.
Guidance: Q1 2026 and beyond
The most closely watched part of Broadcom’s release was its forward guidance — and here, too, the company delivered upside:
- Q1 FY26 revenue guidance: about $19.1 billion, roughly 28% higher than the prior‑year quarter and above prior Street expectations around the low‑$18 billion range. [27]
- Q1 adjusted EBITDA margin: targeted at 67%, unchanged from Q4 but at a very high absolute level. [28]
- Q1 AI semiconductor revenue: expected to double YoY to $8.2 billion, driven by custom accelerators and Ethernet AI switches. [29]
24/7 Wall St’s “Quick Read” notes that analysts now expect FY26 revenue to climb about 35.7% to $86.1 billion, powered by 60%+ growth in AI semiconductor revenue as new hyperscale projects move into mass production. [30]
I/O Fund’s analysis points to even more aggressive EPS trajectories, with adjusted EPS forecast to grow roughly 39% in FY26 and 36% in FY27, reflecting operating leverage from both AI and VMware. [31]
Dividend hike and balance sheet strength
With cash gushing in, Broadcom’s board approved a 10% increase in the quarterly dividend to $0.65 per share, implying an annual payout of $2.60. That marks the 15th consecutive year of dividend increases since the company initiated dividends in 2011. [32]
Additional financial strength points:
- Cash & equivalents: $16.2 billion at quarter‑end, up from $10.7 billion in the prior quarter. [33]
- Free cash flow in FY25: $26.9 billion, reflecting robust profitability even after the VMware integration. [34]
The combination of high margins, strong cash generation and growing dividends is central to Broadcom’s appeal for both growth and income‑oriented investors.
Market reaction: Oracle jitters give way to an AVGO relief rally
Ahead of the report, Broadcom shares had been under pressure alongside other AI chip names after Oracle’s Q2 results and higher‑than‑expected AI capex raised fresh questions about an “AI bubble.” TipRanks reported that Nvidia, AMD and Broadcom all fell in pre‑market trading on Thursday as investors digested Oracle’s more cautious commentary on enterprise AI spending. [35]
A separate TipRanks piece highlighted a high‑profile investor who warned that Broadcom was “primed for disappointment” after a 61% six‑month rally, pointing to elevated expectations and saying the stock could stumble if Q4 numbers or guidance fell short. At the same time, that article noted that AVGO was still rated “Strong Buy” on Wall Street, with 24 Buy ratings, one Hold and an average price target of about $436, implying mid‑single‑digit to high‑single‑digit upside from pre‑earnings levels. [36]
During the regular session, Broadcom stock slid roughly 3% amid sector‑wide selling in AI names, leaving the shares still up more than 70% year‑to‑date. [37]
Once earnings hit, the tone shifted:
- 24/7 Wall St reported that AVGO shares were initially up about 3% in after‑hours trading as investors digested the beat‑and‑raise quarter. [38]
That relief rally is modest compared with some of Broadcom’s prior post‑earnings spikes, but it’s notable given recent AI‑bubble worries and the stock’s big run into the print.
Valuation and analyst views: still a high‑expectations stock
Even after Thursday’s wobble, Broadcom remains a high‑expectations, premium‑multiple AI name.
- Zacks data (via Nasdaq) put Broadcom’s 2025 price‑to‑earnings ratio around 76, versus about 22 for its industry, underscoring how much future growth is already baked into the shares. [39]
- Rosenblatt Securities recently lifted its price target to $440, citing rising TPU/XPU leverage and expanding EPS power ahead of earnings. [40]
- A Bank of America note highlighted by Investopedia boosted its objective to $460, arguing that Broadcom’s custom AI chips and VMware integration could drive EPS power well beyond current consensus in the coming years. [41]
Meanwhile, IO Fund’s December 11 report frames Broadcom as a “silent winner” in the AI monetization supercycle, pointing to an AI revenue trajectory that could rival or complement Nvidia over time, especially in inference and custom accelerators. [42]
The upshot: many analysts still see upside, but from already stretched valuation levels where any misstep on AI demand, customer concentration, or VMware execution could trigger sharp pullbacks.
What today’s AVGO earnings mean for investors
For investors tracking AI and semiconductor leaders, Broadcom’s Q4 report sends several clear messages:
- AI demand is not slowing yet. A 74% jump in AI semiconductor revenue and guidance for a doubling of AI sales in Q1 FY26 show that, at least for Broadcom’s customer set, large‑scale AI infrastructure buildouts remain firmly on track. [43]
- The business is increasingly diversified and durable. With VMware Cloud Foundation adopted by over 90% of VMware’s top customers and software revenue rising at a double‑digit clip, Broadcom is less dependent on any single chip cycle than in past years. [44]
- Cash returns are accelerating. A double‑digit dividend hike alongside strong free cash flow and a hefty cash balance gives Broadcom plenty of flexibility for buybacks, debt reduction or further M&A over time. [45]
- Expect volatility around AI sentiment. Oracle’s earnings and warnings about AI spending saw AVGO slump before the print; similar macro or customer‑specific headlines could keep volatility elevated even if Broadcom continues to execute. [46]
- Valuation leaves little room for big mistakes. With AVGO trading at a substantial premium to peers, much of the AI and VMware growth story is already priced in; future returns will likely depend on Broadcom hitting — or beating — that aggressive FY26–27 revenue and EPS trajectory. [47]
For now, though, Broadcom’s Q4 2025 earnings confirm that the AI infrastructure boom remains a powerful tailwind. The company is converting that demand into record revenue, expanding margins, growing cash flows and rising dividends — all while setting expectations for another year of rapid growth in 2026.
As always, anyone considering AVGO should weigh today’s strong fundamentals against valuation, macro risk and their own risk tolerance, and consider seeking professional financial advice before making investment decisions.
References
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