Broadcom Inc. (NASDAQ: AVGO) stock is under the microscope on Friday, December 12, 2025, after the chip-and-software giant reported fiscal fourth-quarter results and issued a strong next-quarter revenue outlook—yet warned investors that profit margins are likely to dip as AI-related business becomes a bigger part of the mix. [1]
As of 12:44 UTC on Dec. 12, Broadcom shares were trading around $406.37, down about 1.5% versus the prior close—after a sharper post-earnings move that pressured the broader AI trade in premarket action. [2]
Below is a comprehensive roundup of today’s key AVGO stock news, forecasts, and analyst takes—including what Broadcom actually reported, why the market sold it anyway, and what Wall Street is watching next.
What happened to Broadcom stock on Dec. 12, 2025?
Broadcom posted a beat-and-raise style quarter (strong results and a strong revenue guide), but investors focused on the profitability trade-off of Broadcom’s accelerating AI business—especially as the company sells more AI systems and other lower-margin components alongside high-value silicon. Reuters reported the company expects its first-quarter consolidated gross margin to decline ~100 basis points sequentially, largely due to a higher mix of AI revenue. [3]
That margin commentary helped trigger a downside reaction after the report and into Friday’s session, even as Broadcom’s AI demand signal remained loud. Reuters also noted that Broadcom’s margin warning weighed on broader equity index futures tied to tech, feeding renewed “AI payoff” debates in the market narrative. [4]
Broadcom earnings snapshot: Q4 and full-year fiscal 2025 results
Broadcom said its fiscal Q4 (ended November 2, 2025) delivered record revenue and very large cash generation, underscoring why AVGO has been one of the market’s most watched AI infrastructure bellwethers. [5]
Key Q4 fiscal 2025 numbers (company release)
- Revenue:$18.015B, up 28% year over year
- GAAP net income:$8.518B
- Non-GAAP net income:$9.714B
- GAAP diluted EPS:$1.74
- Non-GAAP diluted EPS:$1.95
- Adjusted EBITDA:$12.218B (about 68% of revenue)
- Free cash flow:$7.466B (about 41% of revenue) [6]
Broadcom also posted strong segment performance:
- Semiconductor solutions revenue (Q4):$11.072B
- Infrastructure software revenue (Q4):$6.943B [7]
Full-year fiscal 2025 highlights (company release)
- Revenue:$63.887B, up 24% year over year
- Free cash flow:$26.914B
- Semiconductor solutions revenue:$36.858B (up 22%)
- Infrastructure software revenue:$27.029B (up 26%) [8]
Why this matters for AVGO stock: Broadcom is no longer “just” a semiconductor story. Investors increasingly value it as a combined AI silicon + networking + infrastructure software platform, with substantial free cash flow supporting dividends and buybacks.
Guidance and margin outlook: the core reason AVGO sold off
Broadcom guided first-quarter fiscal 2026 revenue to approximately $19.1B (about 28% year-over-year growth) and Adjusted EBITDA at roughly 67% of revenue. [9]
But the market zeroed in on the profitability line items:
- Reuters highlighted management’s expectation for gross margin down ~100 bps sequentially due to a higher AI revenue mix. [10]
- On the earnings call transcript, Broadcom’s CFO reiterated that gross margins through the year will be impacted by revenue mix (software vs. semis) and by product mix within semiconductors, with Q1 gross margin expected to be down about 100 bps sequentially. [11]
This is the tug-of-war behind today’s AVGO stock volatility:
Investors want the AI growth.
But they also want confidence that Broadcom can scale AI without structurally eroding profitability—even if operating leverage offsets some gross margin pressure.
Morningstar analysts, cited by Reuters, argued they were not concerned about gross margin dilution because they see these AI chips as operating-margin accretive. [12]
The AI engine: $73B AI backlog, custom accelerators, and networking momentum
Broadcom’s report reinforced its role as a key supplier to hyperscalers building AI data centers—particularly through custom accelerators (ASICs/XPUs) and Ethernet switching.
Q4 AI semiconductor revenue: $6.5B
In the earnings call transcript, Broadcom said AI semiconductor revenue was $6.5B in Q4, up 74% year over year, helping drive overall semiconductor segment growth. [13]
Q1 AI revenue forecast: $8.2B
Broadcom expects Q1 fiscal 2026 AI semiconductor revenue to rise to $8.2B, about 100% year over year, supported by custom accelerators and Ethernet AI switches. [14]
The headline: $73B AI backlog over ~18 months
Broadcom also disclosed an AI order picture that remains one of the most cited numbers in today’s AVGO coverage: an AI backlog in excess of $73B, expected to be delivered over the next 18 months. [15]
Reuters emphasized a critical detail that cuts both ways for AVGO stock:
- The AI backlog is concentrated among five customers, and it includes systems—which have a higher price tag but can come with lower gross margins as Broadcom passes through third-party components. [16]
Saxo Bank’s Dec. 12 analysis echoed that investor debate: backlog provides visibility, but it also raises questions about customer concentration risk if AI buildouts pause, delay, or shift timing among a small set of hyperscalers. [17]
Anthropic and other customer signals
One of the more widely circulated call details today: Broadcom discussed large orders tied to Anthropic. In the transcript, CEO Hock Tan referenced a prior $10B order and said Broadcom received an additional $11B order from the same customer for delivery in late 2026. [18]
Investor takeaway: Broadcom is showcasing real, contractual-looking demand signals—but the market is increasingly focused on how profitable those dollars are as Broadcom moves from chips into full-rack and system-level sales.
VMware and software: strong cash generation, but also regulatory and customer scrutiny
Broadcom’s Infrastructure Software segment—largely tied to VMware—remains a major component of the AVGO equity story. In Q4, infrastructure software revenue was $6.943B (+19% YoY). [19]
On the earnings call transcript, Broadcom also discussed strong software bookings and backlog dynamics (including VMware Cloud Foundation adoption), reinforcing that the software unit is a key stabilizer to the overall model. [20]
New risk headline: EU court challenge tied to VMware deal approval
Separate from earnings, Reuters reported Dec. 11 developments that remain relevant to AVGO’s risk profile on Dec. 12: a cloud industry lobby group (CISPE) has challenged the European Commission’s earlier clearance of Broadcom’s $69B VMware acquisition, alleging regulators failed to properly assess competition impacts. Broadcom said it strongly disagrees, and the Commission said it is ready to defend its decision. [21]
Why this matters for the stock: Even if the VMware deal is closed and integrated, regulatory scrutiny can influence remedies, pricing freedom, and the narrative around customer pushback—each of which can affect software growth assumptions embedded in AVGO valuation.
Dividend hike and capital returns: a key pillar for long-term AVGO bulls
Broadcom announced a 10% increase in its quarterly dividend to $0.65 per share for fiscal 2026. The dividend is payable Dec. 31, 2025 to shareholders of record Dec. 22, 2025. [22]
In the earnings call transcript, Broadcom also described:
- substantial shareholder returns in fiscal 2025 (dividends and buybacks), and
- an extension of its share repurchase program (with remaining authorization cited in the transcript). [23]
For Google News and Discover readers, this is worth emphasizing: Broadcom is not being valued like a typical “boom-bust” semiconductor name. Many shareholders treat it as a cash-compounding infrastructure platform—but that thesis depends on Broadcom proving it can grow AI while preserving high margins and strong free cash flow.
Analyst forecasts and price targets on Dec. 12, 2025
Today’s analyst commentary is notably split in tone—but not in attention. Many analysts raised price targets after the earnings print, even as the market traded down on margin fears.
Notable price target moves and ratings (as reported today)
- Bernstein: raised target to $475 (Outperform) [24]
- Morgan Stanley: raised target to $462 (Overweight) [25]
- Evercore ISI: raised target to $490 (Outperform) [26]
- BofA Securities: raised target to $500 (Buy) [27]
- Rosenblatt: raised target to $450 [28]
Some coverage also cited additional firms (e.g., Mizuho, HSBC) adjusting targets upward; these references varied by outlet and update timing. [29]
Consensus snapshots (why you may see different “averages” today)
Different data providers can show different consensus targets depending on how quickly today’s updates are incorporated:
- TipRanks reported a Strong Buy consensus with an average price target around $439.19 (based on its tracked analyst set at the time of publication). [30]
- MarketBeat showed an average target around $392.46, implying slight downside versus the spot price—likely reflecting lag or a different analyst universe. [31]
How to read this as an investor: The directional signal today is that several bullish firms are leaning into Broadcom’s AI visibility and backlog, while the market is applying a near-term discount for margin uncertainty and customer concentration.
The bull case vs. bear case for Broadcom stock right now
Bull case: AI visibility + cash-flow machine
The bullish view rests on four pillars:
- Clear AI demand signal (Q4 AI semiconductor revenue and the $73B AI backlog). [32]
- Rising near-term revenue trajectory, including Q1 guidance of ~$19.1B. [33]
- High cash generation supporting dividends and buybacks. [34]
- Software scale (VMware) providing recurring revenue and operating leverage. [35]
Bear case: margins, concentration, and the “AI payoff” debate
Key risks being emphasized in today’s coverage include:
- Margin dilution as Broadcom sells more systems and passes through third-party components, impacting gross margin even if operating profit dollars rise. [36]
- Customer concentration: Reuters and other analysts note the AI backlog is tied to just a handful of large customers, making the timing of hyperscaler spending cycles particularly influential. [37]
- Manufacturing and supply chain economics: Reuters cited analyst concern that foundry costs (including TSMC) could pressure profitability in custom AI processors over time. [38]
- Regulatory and ecosystem friction around VMware in Europe, which can affect sentiment and longer-term assumptions. [39]
- Macro narrative risk: Broadcom’s margin comments fed broader “AI bubble” fears in market coverage, influencing short-term flows in tech. [40]
What to watch next for AVGO stock
If you’re tracking Broadcom stock into the next quarter, today’s news flow suggests focusing on a short list of metrics:
- Q1 gross margin outcome vs. the ~100 bps sequential decline outlook (and whether operating leverage offsets it). [41]
- AI revenue trajectory: does Broadcom hit the $8.2B AI semiconductor revenue expectation for Q1? [42]
- Systems mix: how quickly does system-level revenue scale, and what does that do to margin structure? [43]
- Non-AI semiconductor stability: Broadcom has signaled that non-AI semis are expected to be relatively stable even as AI drives growth. [44]
- VMware execution: software growth, renewals, and any regulatory/customer pushback headlines. [45]
- Capital returns: dividend follow-through and buyback pace as free cash flow scales. [46]
Bottom line: Broadcom stock is trading the “quality of AI revenue,” not just the quantity
On Dec. 12, 2025, AVGO is a classic case of a stock where the headline numbers are strong—but the market is demanding clarity on profitability durability as the business shifts deeper into AI systems and large-scale infrastructure buildouts. Broadcom’s own guidance and call commentary makes clear that mix-driven margin pressure is part of the near-term story, even as revenue visibility looks unusually high for a company of its size. [47]
For long-term investors, the debate likely comes down to this: Does Broadcom’s AI backlog convert into sustainable, high-quality earnings growth—and can VMware remain a dependable cash engine while AI scales? Today’s analyst upgrades suggest many on Wall Street believe the answer is yes, but the stock’s immediate reaction shows that the market wants proof in the next couple of quarters. [48]
References
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