Broadcom Inc. (NASDAQ: AVGO) moved from pre‑earnings anxiety to post‑earnings relief on Thursday, December 11, 2025. After trading lower during the regular session alongside other AI and chip names, the stock bounced in extended trading after delivering a clean beat on both revenue and earnings and issuing strong guidance fueled by AI demand.
With markets reopening on Friday, December 12, investors will be weighing blockbuster numbers, rich valuations, and ongoing AI bubble worries. Here’s a structured look at what just happened with Broadcom stock, and what to watch before the bell.
AVGO stock: from intraday weakness to after‑hours strength
Broadcom shares spent most of Thursday under pressure as investors rotated out of high‑flying tech and into more defensive blue chips. Oracle’s disappointing results and AI‑related spending concerns hit many AI plays, with Broadcom down roughly 1.5–3% during the session as part of that broader move. [1]
Despite the negative tone, AVGO still closed just above the $400 mark (around the mid‑$400s), modestly lower on the day. [2]
The tone flipped once earnings dropped:
- Regular close (Dec 11, 2025): About $406 per share, down around 1.6% on the day. [3]
- After‑hours (4:16 p.m. ET): AVGO traded near $417.56, up roughly 2.8% from the close. [4]
Separate coverage of the release noted that Broadcom’s “top and bottom line beat” sparked a rally in post‑market trading, confirming that the initial reaction from investors was positive. [5]
In other words, the stock went into earnings priced for perfection and under pressure—but the numbers were good enough to push it higher after the bell.
Key Q4 FY2025 numbers: a classic Broadcom beat
Broadcom’s fiscal Q4 2025 (quarter ended November 2, 2025) was strong across the board, with results well ahead of the expectations that had built up over recent weeks:
Headline results (Q4 FY2025) [6]
- Revenue:$18.0 billion, up 28% year‑over‑year, versus consensus around $17.4–$17.5 billion. [7]
- GAAP net income:$8.52 billion, up 97% from the prior year.
- Non‑GAAP net income:$9.71 billion, up 39%.
- GAAP diluted EPS:$1.74, up 93% year‑over‑year.
- Non‑GAAP diluted EPS:$1.95, versus Street estimates near $1.86–$1.88 and up 37% from $1.42 a year ago.
- Adjusted EBITDA:$12.22 billion, 68% of revenue.
- Free cash flow:$7.47 billion, about 41% of revenue.
Segment performance (Q4 2025) [8]
- Semiconductor Solutions revenue:$11.07 billion, up 35% year‑over‑year.
- Infrastructure Software revenue (VMware and other software):$6.94 billion, up 19%.
Management highlighted that record Q4 revenue was driven “primarily by AI semiconductor revenue increasing 74% year‑over‑year,” underscoring just how central AI has become to Broadcom’s story.
Full‑year FY2025 highlights
For the full fiscal year, Broadcom posted: [9]
- Revenue:$63.9 billion, up 24% from FY2024.
- GAAP net income:$23.1 billion, nearly 4x the prior year.
- Non‑GAAP EPS:$6.82, up 40% from $4.87.
- Free cash flow:$26.9 billion, up 39% year‑over‑year.
Those numbers reinforce a familiar pattern: Broadcom is growing fast, highly profitable, and extremely cash‑generative.
AI chips and VMware: the twin engines behind the beat
AI semiconductor revenue is now the main growth driver
Going into the print, multiple previews pointed to AI as the dominant theme. Analysts expected AI semiconductor revenue in Q4 to jump about 66% year‑over‑year to roughly $6.2 billion, representing more than half of Broadcom’s semiconductor revenue. [10]
The actual Q4 release confirms that AI accelerated even more strongly:
- Management said record Q4 revenue was “driven primarily by AI semiconductor revenue increasing 74% year‑over‑year”.
- Prior coverage of Broadcom’s AI business highlighted that AI chips already accounted for over 60% of semiconductor revenue in Q3, and that Broadcom has secured more than $10 billion in AI rack orders from a fourth hyperscale customer, with volumes ramping further in FY2026. [11]
This positions Broadcom as a central supplier of custom AI accelerators (XPUs) and high‑performance networking to hyperscalers like Alphabet, Meta, and others—often framed as the No. 2 infrastructure player in AI after Nvidia.
VMware and infrastructure software are the high‑margin ballast
The other pillar of Broadcom’s model is software, dominated by VMware:
- Infrastructure Software revenue grew 19% year‑over‑year in Q4 to $6.94 billion. [12]
- Earlier analyses noted that VMware Cloud Foundation (VCF) had been adopted by over 90% of the top 10,000 VMware customers, with the next two years focused on deployment and upsell of higher‑margin services. [13]
At the same time, there’s been intense scrutiny of Broadcom’s VMware integration, including:
- Major licensing changes, price increases and a shift to subscriptions. [14]
- A revamp of partner programs and reseller relationships that has both widened margins and triggered customer pushback in some markets. [15]
For now, the software segment remains a powerful margin stabilizer, with prior quarters showing gross margins in the ~90% range for VMware‑driven software.
Guidance: Q1 FY2026 outlook keeps the AI growth story intact
Alongside Q4 numbers, Broadcom issued guidance for the first quarter of fiscal 2026 (ending February 1, 2026): [16]
- Q1 FY2026 revenue: About $19.1 billion, up 28% vs. the prior year.
- Q1 FY2026 Adjusted EBITDA:67% of revenue.
CEO Hock Tan also gave a crucial AI datapoint:
- Broadcom expects AI semiconductor revenue in Q1 FY2026 to double year‑over‑year to about $8.2 billion, driven by custom AI accelerators and Ethernet AI networking. [17]
Before the report, Reuters/LSEG data suggested the Street was looking for Q1 revenue closer to $18.3 billion and EPS around $1.95, with FY2026 revenue expectations near $87.5 billion.
Broadcom’s Q1 guidance of $19.1 billion therefore implies:
- Growth and AI momentum that are ahead of the pre‑earnings consensus, at least on revenue.
- A continued willingness to run at very high EBITDA margins (~67%), even as AI hardware—typically lower margin than software—takes up a larger share of the mix.
For investors heading into Friday’s open, that guidance is arguably the single most important factor supporting the after‑hours bounce.
Dividend hike: another signal of confidence
Broadcom’s board also approved a 10% increase in the quarterly dividend: [18]
- New quarterly dividend: $0.65 per share (annualized $2.60).
- Payable December 31, 2025 to shareholders of record on December 22, 2025.
That marks the 15th consecutive annual dividend increase since 2011 and reflects Broadcom’s very strong cash‑flow profile, with FY2025 free cash flow near $26.9 billion.
Income‑oriented investors may see this as further validation that management believes current AI and software trends are sustainable over the medium term.
Valuation check: still expensive, even after earnings
Broadcom was already priced as an elite AI and software infrastructure name going into this report:
- YTD, the stock is up about 74–75%, versus about 47% for the Philadelphia Semiconductor Index and ~25% for the S&P 500 tech sector. [19]
- A Reuters preview earlier today noted AVGO trading around 42x forward earnings, its priciest valuation on record. [20]
- A separate deep dive estimated forward P/E in the mid‑40s and flagged that some valuation models see AVGO trading 30–35% above intrinsic value, even while remaining a consensus “Strong Buy.”
Using the new numbers:
That implies:
- A trailing P/E in the low 60s on FY2025 earnings.
- A forward P/E in roughly the mid‑40s if FY2026 EPS lands around the $9+ per share range implied by some Street estimates. [23]
In short: the beat and raised AI outlook help justify some of the premium, but Broadcom remains priced as a high‑growth AI winner with very little room for execution missteps.
Options market & volatility: traders were primed for a big move
Before the report, derivatives markets were signaling that traders expected a large post‑earnings swing in AVGO:
- An Investopedia analysis of options pricing suggested AVGO could move up or down by about 6% by the end of this week, based on implied volatility around the event. [24]
- Other options data sources similarly pointed to a roughly 6–7% implied one‑day move, consistent with Broadcom’s history of sizeable post‑earnings reactions. [25]
So far, the after‑hours jump of roughly 2.8% is well within that expected band, leaving room for further movement—up or down—once cash trading resumes on Friday, December 12.
Market backdrop: AI euphoria meets “show‑me” skepticism
Broadcom’s results arrived on a complicated macro day for tech:
- The Dow Jones Industrial Average closed at a new record high, while the Nasdaq slipped, as Oracle’s earnings and AI‑spending concerns weighed on high‑multiple tech names. [26]
- Oracle’s stock plunged after it reported weaker‑than‑expected revenue and raised questions about the sustainability of AI‑driven capital spending, dragging peers including Nvidia and Broadcom lower intraday.
Against this backdrop:
- Broadcom’s clean beat and strong AI guidance are likely to be read as evidence that at least some AI infrastructure spending is translating into very real profits.
- At the same time, the bubble narrative around AI has not gone away. Some institutional investors publicly warned earlier today that Broadcom’s six‑month rally north of 60% had left the stock “primed for disappointment” if earnings didn’t significantly exceed expectations. [27]
Friday’s open will thus be a tug‑of‑war between fundamental strength and valuation- and macro‑driven skepticism.
Key things to watch before (and just after) the December 12 open
Here are the main factors traders and long‑term investors should focus on as AVGO heads into the next session:
1. Can AVGO hold above new resistance around the low‑$400s?
- AVGO recently set an intraday record above $407, and Thursday’s after‑hours levels near $418 would put the stock decisively above that prior high if sustained. [28]
- Intraday on Thursday, shares traded as low as roughly $394, making the $395–$400 zone a short‑term support band to watch. [29]
If the stock gaps up at the open, traders will be watching whether AVGO holds above $410–$415 or quickly “fills the gap” back toward the high‑$390s.
2. Conference call commentary on AI customers and margins
Much of the real price discovery may come not from the headline numbers—which are already out—but from management’s tone on the conference call and subsequent analyst notes. Key topics:
- AI customer concentration and durability: Investors will listen closely for comments on the depth and duration of AI chip programs with hyperscalers like Alphabet and Meta, including any hints about future generations of Google’s in‑house chips that might change Broadcom’s role.
- Gross margin trajectory: Prior guidance hinted at margin pressure from lower‑margin custom AI accelerators even as software remains ultra‑profitable. Some analysts flagged this as a key risk “even if the top line beats.” [30]
If management convincingly frames margins as stable within their high‑60s EBITDA target, that would support the bullish narrative. Any suggestion of sustained margin erosion could cap the rally.
3. VMware integration, pricing, and customer churn
On the software side, investors will be watching for:
- Update on VMware Cloud Foundation deployments, where Broadcom has indicated very high adoption among top customers. [31]
- Signals on churn or pushback from customers affected by VMware pricing and licensing changes. Reports throughout 2025 have highlighted both strong recurring revenue and significant customer dissatisfaction in some segments. [32]
Stronger‑than‑expected VMware renewals and upsell would reinforce the “software cash cow” thesis and help justify Broadcom’s premium multiple.
4. Street reaction: upgrades, target hikes—or “too much, too fast”?
Analyst sentiment heading into earnings was overwhelmingly bullish:
- Visible Alpha tracked a unanimous “buy” rating set, with an average price target around $430+, and some recent target hikes to $435–$460 from major banks like Goldman Sachs and Bank of America.
- Reuters/LSEG data showed 49 analyst ratings, with the vast majority in the “buy” camp and only a couple of “hold” calls.
Friday morning notes will show whether:
- Analysts raise targets further on the back of the AI revenue doubling guidance, or
- Some fold in higher estimates but emphasize that valuation is now so stretched that the risk‑reward is more balanced.
Either way, fresh target and rating commentary will likely influence early trading.
5. Broader AI & macro sentiment
Finally, AVGO will still trade within a broader risk environment:
- If AI‑exposed mega‑caps remain under pressure due to continued concerns about over‑investment and AI “bubbles,” that could limit upside even for very strong reports.
- Conversely, if markets interpret Broadcom’s numbers as evidence that AI spending is producing real earnings, not just capex promises, the stock could become a focal point for renewed AI enthusiasm.
For short‑term traders: scenarios for Friday
Nothing here is investment advice, but from a scenario perspective, here’s how things line up going into the December 12 open:
- Bullish continuation scenario
- AVGO opens with a gap up near or above after‑hours prices.
- The tape shows strong buying above $410–$415, with dips quickly bought.
- Conference‑call commentary and analyst notes emphasize sustained AI growth, resilient margins, and VMware strength.
- In this case, options traders who bet on upside may be rewarded, and the stock could push further into uncharted territory toward the mid‑$420s and beyond, still within earlier options‑implied ranges. [33]
- Fade‑the‑gap scenario
- AVGO opens higher but quickly sells off toward the $395–$400 band as investors lock in profits after a huge year‑to‑date run.
- Commentary on margins, customer concentration, or VMware churn raises questions, or macro AI sentiment remains sour.
- The stock might still finish the day roughly flat versus pre‑earnings levels, even after a headline beat.
- Surprise downside scenario
- New information on the call—such as a more cautious long‑term AI outlook, larger margin drag from custom chips, or more visible VMware churn—contradicts the initial enthusiasm.
- Given options pricing, a move of 5–7% in either direction wouldn’t be statistically unusual around earnings. [34]
Because the stock is both widely owned and option‑heavy, order flow dynamics at the open (including dealers hedging options positions) could amplify whatever direction the market chooses.
For long‑term investors: what this report really says
Zooming out from the minute‑by‑minute trading:
- Broadcom’s Q4 and FY2025 results reinforce its status as an AI and software infrastructure giant with:
- Rapid revenue growth,
- Massive free cash flow, and
- A growing, durable dividend.
- Structural trends in AI networking, custom accelerators, and private/hybrid cloud support a strong multiyear growth case, as highlighted in recent deep‑dive research.
The flip side is that a lot of this good news is already priced in:
- Valuation multiples are well above historical norms and sector averages. [35]
- Analysts and institutional investors increasingly frame AVGO as a “show‑me” stock: continued high‑quality execution is required simply to avoid multiple compression.
For investors, the key question after this report isn’t whether Broadcom is a great business—it clearly is—but whether the current price adequately compensates for AI, macro, and integration risks over the next several years.
Bottom line
Going into Friday, December 12, 2025:
- Broadcom has delivered exactly what the market was demanding: a strong Q4 beat, powerful AI growth, resilient margins, a fatter dividend, and guidance that points to further acceleration in AI revenue.
- The stock’s after‑hours rally shows that investors are initially rewarding that performance.
- But with AVGO now trading at premium valuations, tomorrow’s session will test how much more AI optimism investors are willing to price in right now.
References
1. finance.yahoo.com, 2. finance.yahoo.com, 3. stockanalysis.com, 4. stockanalysis.com, 5. sherwood.news, 6. www.prnewswire.com, 7. www.zacks.com, 8. www.prnewswire.com, 9. www.prnewswire.com, 10. www.zacks.com, 11. 247wallst.com, 12. www.prnewswire.com, 13. 247wallst.com, 14. www.channelinsider.com, 15. www.graphon.com, 16. www.prnewswire.com, 17. www.prnewswire.com, 18. www.prnewswire.com, 19. www.nasdaq.com, 20. www.bloomberg.com, 21. www.prnewswire.com, 22. stockanalysis.com, 23. 247wallst.com, 24. www.investopedia.com, 25. www.optionslam.com, 26. seekingalpha.com, 27. www.bloomberg.com, 28. finance.yahoo.com, 29. finance.yahoo.com, 30. seekingalpha.com, 31. 247wallst.com, 32. www.channelinsider.com, 33. www.investing.com, 34. www.optionslam.com, 35. www.bloomberg.com
