Broadcom stock (NASDAQ: AVGO) is under the microscope after a sharp post-earnings selloff—here’s what the latest news, forecasts, and analyst commentary say about AI demand, margins, and what comes next.
Published: December 14, 2025
Broadcom Inc. (NASDAQ: AVGO) is closing out the week as one of the most talked-about “AI trade” bellwethers on Wall Street—after delivering strong financial results and upbeat revenue guidance, yet still triggering a steep selloff that rippled across big-cap tech and semiconductors.
As of the latest available quote, AVGO traded around $359.93, down roughly 11% from the prior close following Friday’s drop. That move helped turn Broadcom into a major drag on U.S. indexes at the end of the week, amplifying a broader rotation out of high-flying AI-linked names. [1]
Below is a comprehensive roundup—based on the most current reporting and analyst notes available as of 14.12.2025—covering the key headlines, what management actually guided, where forecasts stand, and the real debate now shaping the AVGO bull vs. bear case.
Key takeaways for Broadcom stock today
- Broadcom beat Q4 expectations and guided Q1 revenue higher, but investors punished the stock over margin compression tied to a richer AI mix. [2]
- Management highlighted surging AI semiconductor momentum—including an expectation that AI semiconductor revenue will reach $8.2B in the current quarter. [3]
- Reuters reported Broadcom disclosed an AI-related backlog of $73B expected to ship over the next 18 months, with concentration among a limited number of customers—one of the core risk points investors are debating. [4]
- Wall Street’s stance is still broadly constructive: Visible Alpha data cited by Investopedia shows all 12 analysts tracked rate the stock “buy”, with an average target around $432. [5]
- Price targets are being revised upward by some firms even as near-term profitability worries rise—Morgan Stanley lifted its target to $462, and Cantor reiterated $525, according to Investing.com coverage. [6]
What happened to Broadcom stock this week
Broadcom’s latest earnings cycle became a textbook example of how the market’s relationship with AI has changed late in 2025: beating estimates is no longer enough—investors want clean profitability, clear visibility, and evidence that AI growth won’t dilute returns.
On Friday, the selloff in Broadcom helped pull down the broader market. Reuters described renewed “AI payoff” jitters, and the Associated Press noted that Broadcom weighed on indexes even though it posted stronger profit than analysts expected. [7]
Investopedia framed it even more bluntly: Broadcom led a broad pullback in AI hardware names despite posting strong results, reflecting intensifying skepticism about how quickly AI infrastructure spending turns into durable profits. [8]
Broadcom earnings recap: Q4 FY2025 results and Q1 FY2026 guidance
Broadcom’s official results (fiscal Q4 ended November 2, 2025) were undeniably strong on the surface. In its release, Broadcom reported:
- Q4 revenue:$18.015B (up 28% year over year) [9]
- GAAP net income (Q4):$8.518B [10]
- Non-GAAP EPS (Q4):$1.95 [11]
- Free cash flow (Q4):$7.466B [12]
The quarter also highlighted Broadcom’s two-engine model—chips plus software:
- Semiconductor solutions (Q4):$11.072B (61% of revenue) [13]
- Infrastructure software (Q4):$6.943B (39% of revenue) [14]
For the full year, Broadcom reported:
Guidance: revenue up, profitability watched
Broadcom guided Q1 FY2026 revenue (quarter ending Feb. 1, 2026) to approximately $19.1B, and Adjusted EBITDA to about 67% of revenue. [17]
Separately, Reuters reported Broadcom expects AI semiconductor revenue (custom accelerators + networking used in AI data centers) to double year over year to $8.2B in the fiscal first quarter—one of the headline AI figures bulls point to. [18]
Why AVGO fell despite the beat: the margin mix problem
So why did the stock drop hard?
In one line: AI is growing so quickly that it’s changing Broadcom’s profitability profile—at least near term—and the market didn’t like the tradeoff.
Reuters reported CFO Kirsten Spears said Broadcom expects first-quarter consolidated gross margin to decline about 100 basis points sequentially, “primarily reflecting a higher mix of AI revenue.” [19]
That message landed at a time when investors are already jumpy about AI infrastructure economics. Reuters’ broader market coverage described investors rotating away from technology as Broadcom and Oracle helped reignite fears of an AI bubble, with higher Treasury yields adding pressure. [20]
Investopedia echoed the same dynamic: AI optimism pushed a lot of stocks to record highs in 2025, but late-year scrutiny is punishing any hint that growth comes with margin dilution. [21]
The $73 billion AI backlog: bullish signal or concentration risk?
One of the most important data points circulating in the current AVGO debate is the AI backlog.
Reuters reported CEO Hock Tan cited a $73B backlog expected to ship over the next 18 months, and also flagged that the backlog is concentrated among only five customers—a fact that cuts both ways. [22]
- Bullish interpretation: backlog provides visibility, supports multi-quarter growth, and signals Broadcom is deeply embedded with hyperscalers building AI infrastructure.
- Bearish interpretation: a handful of customers means pricing power and renewal risk matter more, and any customer strategy shift can hit growth expectations hard.
Reuters also highlighted how investor unease is tied to this concentration: the backlog includes systems with higher price tags, and system sales may carry lower gross margins while becoming a larger portion of sales in coming quarters. [23]
Big customer headlines: Anthropic, “Ironwood,” and the AI ecosystem
Customer headlines also played into the narrative.
Reuters reported Broadcom has secured massive AI-related contracts this year, including $21B from Anthropic in the past two quarters connected to Google’s custom “Ironwood” chips. [24]
That’s a reminder of what Broadcom actually is in the AI stack: not just a “chips company,” but a key enabler of custom silicon and the high-speed networking that holds AI clusters together—areas where hyperscalers are increasingly spending.
Wall Street forecasts: analyst ratings and price targets (as of Dec. 14, 2025)
Despite the selloff, published forecasts remain broadly constructive—though you can see wider dispersion as uncertainty rises.
Visible Alpha snapshot (via Investopedia)
Ahead of earnings, Investopedia cited Visible Alpha data showing:
- All 12 analysts with current ratings tracked by Visible Alpha rated Broadcom “buy”
- Average price target: about $432.02 [25]
Investing.com consensus snapshot
Investing.com’s consensus estimates page shows:
- 42 analysts tracked
- Average 12-month target: about $452.56
- High estimate:$535
- Low estimate:$273.4 [26]
Notable firm-level target changes highlighted in current coverage
- Morgan Stanley: raised target to $462 from $443, maintaining Overweight, citing strong results and AI revenue trending above their estimates. [27]
- Cantor Fitzgerald: maintained Overweight and a $525 target; the note referenced $73B AI backlog and discussed conversion timing and customer expansion. [28]
How to read this: The Street is not “giving up” on Broadcom’s AI story—but it is increasingly pricing in a world where growth and margins may not rise in lockstep.
The bull case for Broadcom stock: AI scale + networking + software cash flow
If you’re trying to understand why AVGO still has strong support among many analysts even after a brutal tape, the bullish framework is fairly consistent across coverage:
- AI semiconductor revenue is accelerating. Broadcom expects AI semiconductor revenue to hit $8.2B in Q1 FY2026, driven by custom AI accelerators and Ethernet AI switches. [29]
- Cash generation remains substantial. Broadcom reported $26.914B in FY2025 free cash flow, giving it flexibility for shareholder returns and investment. [30]
- Software provides a second leg. Infrastructure software revenue grew year over year in Q4, helping balance the business mix. [31]
- Shareholder returns continue to rise. Broadcom raised its quarterly dividend by 10% to $0.65, payable Dec. 31, 2025 to holders of record on Dec. 22, 2025. [32]
The bear case: margins, valuation, customer concentration—and VMware backlash
The bearish view isn’t that Broadcom lacks AI demand. It’s that the market may have already priced in perfection, and the earnings call introduced just enough friction to reset expectations.
1) Margin dilution may last longer than one quarter
Broadcom’s margin commentary suggests the AI mix shift could pressure margins “through the year,” per Reuters reporting. [33]
2) Valuation is now part of the story
Reuters reported Broadcom trades at about 32 times enterprise value to forward core earnings, compared with figures it cited for Nvidia and AMD—context that matters when investors are looking for reasons to de-risk. [34]
3) Customer concentration raises the stakes
A $73B backlog tied heavily to a limited number of customers can be a strength—until it isn’t. If customer roadmaps change (in-house design shifts, capex tightening, or pricing pressure), the “visibility” can compress quickly. Reuters explicitly highlighted the concentration issue in its reporting. [35]
4) VMware friction is becoming a headline risk in Europe
Away from semiconductors, Broadcom’s VMware strategy continues to draw scrutiny. TechRadar reported that CISPE (a European cloud providers group) has challenged the European Commission’s approval of Broadcom’s VMware acquisition, arguing the deal’s risks (pricing, bundling, lock-in) were underestimated and calling for reassessment if the approval is annulled. [36]
This may not hit quarterly numbers immediately, but it adds a layer of regulatory and reputation risk around the infrastructure software engine that investors often treat as a stabilizer.
What to watch next: catalysts after Dec. 14, 2025
Here are the most concrete “next steps” investors are tracking into the new week:
- Dividend timeline: record date Dec. 22, 2025; payment date Dec. 31, 2025. [37]
- Macro data and risk appetite: Reuters reports investors are heading into key jobs and inflation data with caution, especially after this week’s AI turbulence. [38]
- Market sensitivity to AI capex narratives: As seen this week, even strong results can be punished if margins and AI ROI narratives deteriorate. [39]
Bottom line: Broadcom’s fundamentals look strong—but the market is repricing the “AI premium”
As of December 14, 2025, the consensus picture looks like this:
- Broadcom is still delivering rapid growth and massive cash flow, with AI demand strong and guidance solid. [40]
- Yet the market is forcing a tougher question: How profitable is the next phase of AI growth, especially as custom silicon and systems become a larger share of revenue? [41]
- Analyst targets still generally imply upside from the post-selloff level, but the spread between low and high targets shows the story is becoming more volatile—and more dependent on execution and margins. [42]
References
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