Broadcom (AVGO) Stock: What to Know Before the U.S. Market Opens on Dec. 15, 2025

Broadcom stock (NASDAQ: AVGO) heads into Monday’s session (Dec. 15, 2025) coming off one of its sharpest one-day drops of the year, even after the company delivered record quarterly revenue and upbeat top-line guidance. The disconnect is at the heart of what investors are debating right now: Broadcom’s AI engine is accelerating, but the company is also signaling that the mix of that growth could pressure margins in the near term. ^[1]

Below is what matters most before the opening bell: the latest headlines, what the company actually guided, where analysts are landing, and the near-term catalysts that could move AVGO next.

Key takeaways for Monday morning

Broadcom posted record Q4 revenue and guided Q1 revenue to about $19.1B, with management forecasting AI semiconductor revenue will double year over year to $8.2B. ^[2]
The stock sold off hard because Broadcom warned gross margin could fall about 100 basis points sequentiallyas AI becomes a bigger share of revenue (and as lower-margin system sales grow). ^[3]
Wall Street’s near-term debate isn’t “Is AI demand real?”—it’s how profitable the next leg of AI growth will be, given custom AI processors and systems can carry different margin profiles than legacy franchises. ^[4]
Analysts are still largely constructive: multiple firms raised price targets after earnings (including mentions of $500, $462, and $490 targets in recent notes). ^[5]
Beyond chips, VMware-related legal and regulatory headlines remain an overhang investors should track. ^[6]
Macro matters this week: key U.S. labor-market and inflation releases are scheduled, which can swing high-multiple tech and AI names. ^[7]

What just happened: earnings were strong, the stock wasn’t

Broadcom reported fiscal Q4 2025 results after the close on Thursday, Dec. 11. On the numbers, it was a beat: Q4 revenue was $18.015B and the company delivered non-GAAP diluted EPS of $1.95 (GAAP diluted EPS of $1.74). ^[8]

But by Friday, Dec. 12, investors were focused elsewhere. Broadcom shares fell more than 11% amid concerns that growing sales of lower-margin custom AI processors and related systems could squeeze profitability—and the move fed broader nerves around the AI trade’s “return on investment” storyline. ^[9]

That is the backdrop into Monday: Broadcom remains one of the most closely watched “AI infrastructure” bellwethers, but it’s trading in a market where “good news” can still trigger selling if the margin/ROI narrative disappoints.

The numbers investors are keying on

Q4 and FY2025 performance

Broadcom’s FY2025 results underscore why the stock has had such a powerful run in 2025 despite Friday’s drawdown:

Q4 net revenue: $18.015B (up 28% year over year) ^[10]
Q4 net income (GAAP): $8.518B ^[11]
Q4 segment revenue: Semiconductor solutions $11.072B; Infrastructure software $6.943B ^[12]
FY2025 revenue: $63.887B ^[13]
FY2025 adjusted EBITDA: $43.0B; FY2025 free cash flow: $26.9B ^[14]

Those cash-flow metrics help explain why Broadcom can invest aggressively in AI while still returning capital.

Q1 fiscal 2026 guidance

For the current quarter (Broadcom’s fiscal Q1 2026), the company guided:

Revenue: approximately $19.1B ^[15]
Adjusted EBITDA: 67% of projected revenue ^[16]
AI semiconductor revenue: expected to double year over year to $8.2B ^[17]

In other words: the top line and AI growth outlook were not the problem. The market’s pushback centered on profitability and visibility.

Why the stock dropped: margins, mix, and “AI payoff” anxiety

Broadcom’s message was straightforward: AI is growing fast, but the mix is changing the margin profile. CFO Kirsten Spears said the company expects first-quarter consolidated gross margin to be down about 100 basis points sequentially, “primarily reflecting a higher mix of AI revenue.” ^[18]

Two additional points amplified the market’s reaction:

AI systems can be lower-margin than chips alone. Reuters highlighted concerns from industry analysts that system sales are expected to become a larger portion of total sales in future quarters (notably in the second half of fiscal 2026), potentially carrying lower gross margins than other revenue streams. ^[19]
Customer concentration is still part of the story. Broadcom said it has an AI backlog it expects to ship over the next 18 months, but Reuters noted the backlog is tied to only five customers, a point some analysts flagged as a modeling risk and a sentiment issue when expectations are high. ^[20]

This also hit a broader market nerve. Reuters described how Broadcom’s margin commentary deepened investor jitters around whether Big Tech’s massive AI spending will translate into near-term returns, fueling rotation away from high-growth AI exposures late last week. ^[21]

The AI demand picture: still strong, but investors want cleaner math

Even with the margin debate, the demand signals were hard to ignore:

Broadcom has positioned its AI portfolio around custom AI accelerators (ASICs) and networking (including Ethernet AI switches), and management says AI semiconductor momentum continues into Q1. ^[22]
Broadcom’s CEO cited an AI backlog of $73B expected to ship over the next 18 months, per Reuters coverage of the earnings call. ^[23]
Reuters also reported Broadcom has secured massive AI-related contracts in 2025, including $21B from Anthropic in the past two quarters connected to Google’s custom AI chips (“Ironwood”), illustrating the scale of hyperscaler-led custom silicon demand. ^[24]

The key issue for AVGO in the next few sessions is whether investors decide Friday’s drop was an overreaction to an understandable margin/mix transition—or the start of a broader re-rating of AI infrastructure profitability.

Analyst outlook: price targets rose, but margin questions are real

Despite the selloff, several analyst notes published around the earnings cycle leaned bullish:

Truist raised its price target to $500 and cited additional AI orders and the AI backlog as drivers (while still flagging potential margin pressure). ^[25]
Morgan Stanley raised its price target to $462 and reiterated an Overweight view, pointing to AI revenue guidance that it characterized as meaningfully above its estimates and noting additional large AI orders (while acknowledging modeling uncertainties). ^[26]
A separate report circulated noting Evercore ISI lifted its price target to $490 (headline-level details were available via market coverage). ^[27]

Meanwhile, Investopedia noted that—based on Visible Alpha tracking—analyst ratings remained broadly positive, and the stock was still up roughly around 60% for 2025 even after the drop. ^[28]

The most balanced takeaway: Street targets suggest upside if AI execution continues, but the market is demanding more proof that faster growth can outpace margin compression.

Dividend update: a near-term calendar item for AVGO holders

Broadcom also boosted shareholder returns:

The company increased its quarterly dividend by 10% to $0.65 per share. ^[29]
The dividend is payable Dec. 31, 2025 to stockholders of record as of Dec. 22, 2025. ^[30]
Many market calendars list Dec. 22, 2025 as the ex-dividend date for this payout. ^[31]

For short-term traders, dividend timing is usually not the main driver in a high-volatility, AI-led tape—but for longer-term holders it reinforces Broadcom’s cash-generation story.

VMware and software: strong revenue, but legal/regulatory headlines are back

Broadcom’s infrastructure software segment is a major part of the investment thesis (and a key reason the company is often viewed as more diversified than a pure-play AI chip name). In Q4, infrastructure software revenue was $6.943B. ^[32]

However, VMware-related disputes have re-entered the headlines:

In the U.S., a Fidelity Investments subsidiary sued Broadcom, alleging Broadcom threatened to cut off access to VMware software central to Fidelity’s systems unless a judge intervenes; Reuters reported Broadcom agreed to extend access through Jan. 21 to allow time for a judge to hear the case. ^[33]
In Europe, a cloud industry group (CISPE) has challenged the EU’s prior clearance of Broadcom’s VMware deal, arguing regulators failed to properly assess competitive risks; Broadcom has said it strongly disagrees with CISPE’s allegations, Reuters reported. ^[34]

Investors don’t need to assume worst-case outcomes to treat these as relevant: high-profile disputes can create noise around renewals, customer sentiment, and regulatory scrutiny—even if the financial impact ultimately proves limited.

A smaller—but still notable—headline: Microsoft custom chip rumor

One additional item that occasionally resurfaces in AI infrastructure trading is hyperscaler sourcing. A Motley Fool report syndicated on Nasdaq.com said The Information reported Microsoft may be exploring shifting some custom AI chip work from Marvell to Broadcom, while also noting a JPMorgan analyst suggested Microsoft’s Marvell contract remains intact. ^[35]

Treat this as speculative unless Microsoft or the suppliers confirm details. But it matters because incremental hyperscaler wins can move expectations for Broadcom’s custom silicon pipeline.

What to watch this week that could move AVGO beyond company news

Broadcom is trading in a market highly sensitive to rates and growth expectations. Several key U.S. releases are scheduled for the week ahead, including:

Employment Situation (November 2025): Tuesday, Dec. 16 ^[36]
CPI (November 2025): Thursday, Dec. 18 ^[37]
Retail sales releases (rescheduled): Tuesday, Dec. 16, according to the U.S. Census Bureau’s retail release schedule updates ^[38]

Why it matters: if yields jump on hotter inflation or stronger labor data, the market often compresses multiples on high-expectation AI names. If data eases recession fears without reigniting inflation worries, the “AI leaders” trade can stabilize faster.

Bottom line for Dec. 15: the debate is about margins, not demand

Going into Monday’s open, Broadcom looks less like a “broken AI story” and more like a market wrestling with a classic transition: shifting from ultra-high-margin phases of growth into a broader, more systems-oriented ramp where revenue can be huge—but margins may be less straightforward quarter to quarter. ^[39]

For investors watching AVGO this week, the practical checklist is:

Does the market accept the 100-basis-point gross margin headwind as temporary/mix-driven—or price it as structural? ^[40]
Do analysts continue lifting FY2026 earnings power faster than they cut margin assumptions? ^[41]
Do VMware-related disputes escalate—or fade into the background as renewals and integrations continue? ^[42]
How does AVGO trade around major macro data (jobs, CPI, retail sales) that can reset rate expectations? ^[43]

As always with earnings-driven gaps, early-week price action can be as much about positioning and sentiment as fundamentals. (This article is for informational purposes only and is not investment advice.)