Broadcom (AVGO) Stock Surges Toward Q4 2025 Earnings: AI Supercycle Meets VMware Risk

Broadcom Inc. (NASDAQ: AVGO) heads into its fiscal Q4 2025 earnings report on December 11 with its share price near record highs, riding an AI infrastructure boom but also facing mounting questions about valuation, customer concentration and VMware-related controversy.

As of mid‑day on December 11, 2025, Broadcom stock trades around $413 per share, up roughly 20% from about $349 at the close on November 21. ^[1] Over the past year, shares have climbed more than 110%, far ahead of the broader technology sector, and are up roughly 75% year‑to‑date by several Wall Street estimates. ^[2]

The central question now: with expectations sky‑high for AI and software growth, does AVGO still have room to run, or is too much good news already priced in?

Recent Performance: From November 21 to Earnings Day

On November 21, 2025, Broadcom closed just under $350 per share after a modest 1.9% pullback amid a broader sell‑off in high‑flying AI chip names. ^[3] Since then, the stock has powered nearly 20% higher into earnings, frequently notching new all‑time highs along the way.

Several catalysts helped fuel this late‑November to early‑December rally:

Quantum‑safe networking launch (Nov. 21): Broadcom unveiled new Brocade X8 directors and G820 switches, the first 128G Fibre Channel platforms with “quantum‑safe” 256‑bit encryption and post‑quantum cryptography aimed at AI‑intensive storage networks. ^[4]
Aggressive analyst upgrades:
- Goldman Sachs lifted its AVGO price target from $380 to $435 on November 27. ^[5]
- On December 1, UBS, Bank of America and Morgan Stanley all raised their targets into the $443–$472 range, citing accelerating AI demand. ^[6]
- Susquehanna followed on December 4, boosting its target to $450 and maintaining a “Positive” rating. ^[7]
Technical “buy zone” chatter: Investor’s Business Daily noted on December 2 that Broadcom was back in a buy range after breaking out from a $374.23 buy point and then setting fresh highs. ^[8]

Options markets are now pricing a ±6% swing in AVGO shares following the Q4 earnings release, implying traders expect another potentially explosive move up or down. ^[9]

What the Street Expects from Q4 2025

Consensus heading into today’s report is remarkably tight across outlets, and the bar is high:

Revenue: Around $17.4–$17.5 billion, up about 24% year‑over‑year, compared with $15.95–$16.0 billion in Q3. ^[10]
Adjusted EPS: About $1.87–$1.88, up roughly 30%+ from the prior year’s quarter. ^[11]
AI semiconductor revenue: Around $6.2 billion in Q4, up 66% year‑over‑year and more than 20% sequentially, according to management guidance and multiple analyst previews. ^[12]

Broadcom has now beaten revenue and EPS expectations in 14 of the last 15 quarters, a track record that analysts at TipRanks say makes “another beat” likely, especially with AI demand still ramping. ^[13]

At the same time, several previews caution that margins will be closely scrutinized. Higher‑mix AI accelerators (XPUs) and wireless can pressure gross margin even as they turbo‑charge revenue, and at least one recent analysis is explicitly titled “Bullish Into Q4 2025 Earnings, But Margins Could Bite.” ^[14]

The Foundation: Q3 2025 Earnings and AI Momentum

The bullish narrative since late November rests heavily on Broadcom’s blockbuster Q3 FY 2025 report and guidance:

Total revenue: About $15.95–$16.0 billion, up 22% year‑over‑year, and a modest beat versus consensus. ^[15]
Non‑GAAP EPS:$1.69, up 28% YoY and ahead of estimates. ^[16]
Adjusted EBITDA:$10.7 billion, or roughly 67% of revenue, highlighting unusually strong profitability for a hardware‑heavy company. ^[17]
Segment performance:
- Semiconductor solutions: Around $9.2 billion, up 26% YoY.
- Infrastructure software (including VMware): Roughly $6.8 billion, up 17% YoY, and accounting for ~42% of Q3 revenue. ^[18]
AI semiconductor revenue: Approximately $5.2 billion in Q3, surging 63% year‑over‑year and representing more than half of semiconductor segment sales. ^[19]
Backlog: About $110 billion of consolidated backlog, giving Broadcom unusually long visibility on future revenue. ^[20]

Management guided for Q4 revenue of about $17.4 billion and AI semiconductor revenue of $6.2 billion, implying 11 consecutive quarters of AI revenue growth. ^[21]

These numbers underpin why multiple research houses and independent analysts now describe Broadcom as an “AI infrastructure leader with a long growth runway” and a “profitability machine” built on AI silicon and high‑margin software. ^[22]

AI Supercycle: Custom Chips, OpenAI and Hyperscaler Deals

Since late November, coverage of Broadcom has focused intensely on its role in the AI infrastructure supercycle rather than traditional merchant chips:

Custom AI accelerators and Google TPUs

Broadcom has long been a key partner behind Google’s in‑house Tensor Processing Units (TPUs), which power many of Alphabet’s AI workloads, including its Gemini models. Recent MarketWatch and other analyst commentary highlight Broadcom’s roadmap through seventh‑ and eighth‑generation TPUs, with average selling prices estimated at $10,000–$15,000 per chip. ^[23]

Analysts expect this custom ASIC expertise to extend and broaden to other hyperscalers, including Apple, Meta and Anthropic, as enterprises look beyond off‑the‑shelf GPUs. ^[24]

The OpenAI mega‑deal

Perhaps the single most attention‑grabbing headline this fall was OpenAI’s decision to partner with Broadcom on custom chips and networking:

OpenAI has signed a multi‑year agreement with Broadcom to co‑develop and supply 10 gigawatts of OpenAI‑designed AI accelerators, starting in the second half of 2026 and ramping through 2029. ^[25]
Analysts at I/O Fund and others estimate this and other hyperscaler wins could help Broadcom drive AI revenue to about $20 billion in FY 2025 and potentially $40.4 billion in FY 2026, implying roughly 100% year‑over‑year AI growth in 2026. ^[26]

CEO Hock Tan has also referenced a separate $10 billion XPU order from a new customer, which has become a recurring talking point in bullish previews, further lifting expectations for fiscal 2026 AI revenue. ^[27]

Networking: the “network is the computer”

Broadcom’s AI story isn’t limited to chips. Its high‑end Ethernet and optical networking platforms (e.g., Tomahawk 6, Jericho 4) are designed to connect hundreds of thousands of processors in large‑scale AI clusters. Analysts note that Broadcom is already working on 100‑terabit‑per‑second optical networking solutions, which could begin to replace copper interconnects around 2027. ^[28]

This dual strength in custom AI silicon + networking is a big reason some research houses now view Broadcom as the clear No. 2 AI compute supplier behind Nvidia. ^[29]

VMware: Recurring Revenue Engine and Regulatory Headache

While AI drives the headlines, VMware and infrastructure software supply much of Broadcom’s recurring cash flow — and much of its controversy.

Financial contribution

Infrastructure software, including VMware, accounted for 42.5% of net revenue in Q3 and is expected to grow about 15% year‑over‑year to $6.7 billion in Q4. ^[30]
Broadcom says more than 90% of its top 10,000 software customers have now been converted to multiyear subscriptions, with the rest expected to transition by fiscal 2026, boosting annual recurring revenue. ^[31]

This subscription pivot is a major reason many analysts see Broadcom as a higher‑quality, less cyclical cash‑flow machine than a typical chip vendor.

Pricing and licensing backlash

But that transition has come at a cost:

In April 2025, Broadcom raised VMware’s minimum licensed cores per order from 16 to 72 and shifted entirely to subscription‑only licensing, while consolidating thousands of SKUs into a few bundled offerings such as VMware Cloud Foundation (VCF). ^[32]
Industry surveys and customer anecdotes report license cost increases of 200–1,500% in some cases, triggering a wave of migration planning away from VMware and toward alternatives such as Nutanix and public cloud platforms. ^[33]
In Europe, the European Cloud Competition Observatory (ECCO) and cloud provider group CISPE have accused Broadcom of abusing market power through these licensing practices, culminating in a legal challenge before the EU General Court seeking to annul the European Commission’s unconditional approval of the VMware acquisition. ^[34]

Lawsuits and workload flight

The backlash is no longer theoretical. In November, a Fidelity Investments technology subsidiary sued Broadcom, alleging that VMware licensing changes and refusal to honor existing contract terms could cut off access to mission‑critical virtualization software and risk major outages for Fidelity’s 50 million clients. ^[35]

Meanwhile, Gartner analysts expect VMware to lose up to 35% of its workloads over the next three years under Broadcom’s ownership as customers seek cheaper and simpler alternatives. ^[36]

For investors, VMware is both a profit engine and a regulatory and reputational risk factor that could eventually weigh on growth if enough customers defect.

Valuation Check: Is Broadcom Already Priced for Perfection?

With the stock near all‑time highs, valuation is the core bear argument.

Zacks notes that AVGO trades at a forward 12‑month P/E of about 37.6x, versus roughly 28x for the broader computer and technology sector, and assigns a Value Score of “D” with a Rank #3 (Hold) despite strong fundamentals. ^[37]
TipRanks calculates a P/E north of 60x and an EV/EBITDA around 58x, levels more reminiscent of a high‑growth software or pure‑play AI name than a traditional chip and infrastructure vendor. ^[38]
Barchart estimates Broadcom currently trades at around 47x forward free cash flow, but models revenue rising from $63.4 billion in fiscal 2025 to $177 billion by 2029 and free cash flow expanding from $29.5 billion to $94 billion over the same period. Under those assumptions, a multiple compression to 30x FCF could still yield ~53% upside over three years. ^[39]

Wall Street’s official targets paint a similar picture of optimism tempered by high expectations:

Average 12‑month price targets cluster in the low‑to‑mid $430s:
- Investopedia cites a Visible Alpha average target of $432.02, with all 12 tracked analysts rating AVGO a “Buy.” ^[40]
- TipRanks shows a Strong Buy consensus with 23 Buys, 2 Holds, 0 Sells and an average target of $433.09, implying about 8–9% upside from recent levels. ^[41]
- GuruFocus and other aggregators report a wider one‑year target range from $218 to $535, but an average around $400–402, somewhat below today’s price but based on slightly older quotes. ^[42]

In short, sentiment is strongly bullish, but near‑term upside implied by most targets is modest compared to the stock’s rally since April, when some analyses estimate AVGO has risen about 190%. ^[43]

Key Risks Investors Are Watching

Even the most bullish analyses since November 21 emphasize that Broadcom isn’t a risk‑free AI play:

Valuation risk
With multiples far above sector averages, any disappointment in Q4 guidance, AI bookings or margins could trigger a sharp pullback, especially given options markets are already braced for a big move. ^[44]
Customer concentration and in‑house chip efforts
A sizable chunk of Broadcom’s AI revenue depends on a small number of hyperscalers. Reports suggest Google may design more future TPUs internally, which could eventually pressure Broadcom’s share of that business or its pricing power. ^[45]
VMware backlash and legal overhang
Multi‑fold VMware price increases, EU competition challenges, Gartner’s workload‑loss forecasts and lawsuits like the Fidelity case all highlight that Broadcom’s software strategy could invite regulatory intervention or accelerate customer churn. ^[46]
Competition from Nvidia, AMD and networking rivals
Nvidia still dominates AI compute, while Cisco and Marvell are pushing aggressively into AI networking and co‑packaged optics, areas where Broadcom currently enjoys strong positions. ^[47]
Macro and AI‑cycle risk
Concerns about an “AI bubble” periodically hit high‑multiple chip names. If hyperscaler capex slows or AI workloads monetize more slowly than expected, AI infrastructure leaders like Broadcom could see growth and multiples compress simultaneously. ^[48]

How Analysts See Broadcom Beyond 2025

Despite these risks, much of the commentary since November 21 is strikingly optimistic about Broadcom’s 2026–2029 trajectory:

Multiple banks project double‑digit annual EPS growth through at least 2027, with some models pointing to adjusted EPS above $20 by 2028 if AI contracts ramp as expected. ^[49]
Independent research at I/O Fund and others frames Broadcom as a “silent winner” of the AI monetization supercycle, with AI demand, VMware subscription revenue and optical networking creating compounding growth flywheels rather than a one‑off spike. ^[50]
At least one high‑profile analysis (from The Motley Fool) has argued Broadcom could be the top‑performing chip stock in 2026, primarily because of its diversified AI exposure and software margin profile. ^[51]

The common thread: if Broadcom executes on its AI contracts, continues to convert VMware customers to long‑term subscriptions and successfully rolls out next‑generation networking, today’s premium valuation might prove justified, even if traditional models flag it as stretched. ^[52]

Bottom Line: A High‑Conviction AI Leader, But Not a Low‑Risk Bet

Since November 21, 2025, news and analysis around Broadcom stock have coalesced around a clear narrative:

Bull case:
- Rapidly accelerating AI revenue, potentially doubling again in 2026. ^[53]
- Deep, multi‑year relationships with top AI players like Google and OpenAI. ^[54]
- A powerful combination of custom AI silicon, networking and high‑margin software that makes Broadcom look more like an AI platform company than a cyclical chip maker. ^[55]
Bear case:
- Valuation that assumes years of flawless AI execution. ^[56]
- Regulatory and customer‑relations landmines tied to VMware pricing. ^[57]
- Heavy exposure to a handful of hyperscalers whose in‑house chip ambitions could eventually erode Broadcom’s bargaining power. ^[58]

For investors watching AVGO into tonight’s Q4 print, the setup is straightforward but unforgiving:

A solid beat and strong 2026 AI guidance could reinforce the view of Broadcom as the core “AI infrastructure” stock outside Nvidia.
Any stumble in AI revenue, margins or commentary on VMware churn could be enough to spark a sharp correction from elevated levels.