NEW YORK — It’s 11:51 a.m. ET on Friday, December 26, 2025, and U.S. markets are open for a full post‑Christmas trading session.
Broadcom Inc. (NASDAQ: AVGO) is trading modestly higher in a market that’s flirting with fresh highs into year‑end. In thin holiday volume, the stock’s moves are being interpreted through two big lenses: (1) Broadcom’s surging AI semiconductor demand and massive backlog, and (2) investor scrutiny of profitability, especially after management flagged gross‑margin pressure tied to a richer mix of custom AI hardware. [1]
Broadcom stock price today (AVGO): where shares trade right now
As of late morning in New York, Broadcom shares are around $352, up roughly 0.6% on the day. The stock has traded in a band from about $347.83 to $352.91 so far, with several million shares exchanged by mid‑session—typical “lighter-than-usual” behavior for the holiday week.
This relatively calm tape follows a much more dramatic stretch earlier in December, when Broadcom sold off sharply after earnings despite upbeat revenue guidance—because the market locked onto a single phrase: margin dilution from AI product mix. [2]
Today’s market backdrop: muted holiday trading, indexes near records
Broadcom is moving within a broader year‑end bid in U.S. stocks. Reuters described Friday’s session as muted, post‑Christmas trading with major indexes holding near record peaks, supported by optimism around rate cuts and earnings resilience. [3]
Investors are also looking ahead to 2026 with rate expectations in focus. Reuters noted the Fed has cut rates by 75 basis points over the last three meetings, with the market watching upcoming Fed minutes and leadership decisions at the central bank in the months ahead. [4]
Seasonal factors are adding to the narrative: MarketWatch highlighted that December 26 has historically been one of the most consistently positive calendar days for the S&P 500 and that the market has entered the “Santa Claus rally” window into early January. [5]
The biggest Broadcom catalyst: strong earnings, stronger AI demand — but a margin warning
Broadcom’s latest earnings cycle is still the main driver of how investors are pricing AVGO heading into the last days of 2025.
What Broadcom reported
In its fiscal Q4 2025 results (quarter ended Nov. 2, 2025), Broadcom reported:
- Revenue of $18.015 billion (up 28% year over year)
- Non‑GAAP diluted EPS of $1.95
- Adjusted EBITDA of $12.218 billion (68% of revenue)
- Free cash flow of $7.466 billion in the quarter (41% of revenue) [6]
Broadcom also broke out the scale of its two engines:
- Semiconductor solutions: $11.072 billion in Q4 revenue
- Infrastructure software (including VMware): $6.943 billion [7]
Guidance that impressed — and the caveat that spooked
For fiscal Q1 2026, Broadcom guided to approximately $19.1 billion of revenue and adjusted EBITDA around 67% of projected revenue. [8]
CEO Hock Tan said the AI momentum is continuing and that Broadcom expects AI semiconductor revenue to double year over year to $8.2 billion in Q1, driven by custom AI accelerators and Ethernet AI switches. [9]
But CFO Kirsten Spears warned that consolidated gross margin would be down about 100 basis points sequentially, “primarily reflecting a higher mix of AI revenue.” That one‑percentage‑point guide became a focal point for investors already anxious about whether the AI boom is producing durable profits across the stack. [10]
“AI backlog” is the bull case — and customer concentration is the counterweight
Broadcom is increasingly treated like an AI infrastructure bellwether because it sells both:
- Custom AI processors (ASICs) designed with hyperscale customers, and
- Networking silicon (notably Ethernet switching) that keeps AI data centers connected and scalable. [11]
On the earnings call, management pointed to a $73 billion backlog expected to ship over the next 18 months, a headline number that bulls cite as “visibility” in a market that can reprice quickly. [12]
However, Reuters also highlighted a key nuance flagged by Kinngai Chan, senior research analyst at Summit Insights: the AI backlog has been tied to only about five customers, and it includes more systems (with a higher price tag but lower gross margin) that may become a larger portion of sales later in fiscal 2026. [13]
Another frequently cited concern: manufacturing economics. Reuters reported that Gil Luria of D.A. Davidson raised the possibility that costs tied to foundry partner TSMC could squeeze the value Broadcom ultimately realizes from custom AI processors. [14]
How Wall Street framed the selloff: “panic button” vs. “priced for perfection”
Broadcom’s December drop became part of a broader conversation about AI trade durability.
- Reuters quoted Ben Reitzes of Melius Research saying that, despite volatility, “hitting that panic button is premature,” pointing to the scale of spending intentions across the AI ecosystem. [15]
- Reuters also reported Morningstar analysts said they weren’t concerned about gross‑margin dilution because the AI chips were viewed as operating‑margin accretive (even if gross margin compresses). [16]
- Investopedia noted Bank of America and Deutsche Bank analysts acknowledged the margin concern as “fair,” trimming margin assumptions while still raising earnings estimates and price targets—arguing that faster revenue growth can offset narrowing margins. [17]
In other words, the debate isn’t whether Broadcom is gaining in AI—it’s how much of that growth is already in the stock price and whether the profit profile is shifting as hardware becomes a bigger portion of the mix.
Barron’s captured the more valuation‑cautious angle, pointing to research (Trivariate) suggesting stocks crossing high P/E thresholds can underperform over subsequent years—Broadcom included among names viewed as potentially “priced for perfection” into 2026. [18]
Dividend and cash flow: Broadcom leans into shareholder returns
One reason Broadcom often trades differently from pure‑play chip peers is its cash‑flow profile and willingness to return capital.
Broadcom announced a 10% dividend increase to $0.65 per share for fiscal 2026, calling it the 15th consecutive annual dividend increase since initiating a dividend in fiscal 2011. [19]
The company tied the increase to fiscal 2025 cash generation—reporting $43.0 billion in fiscal‑year adjusted EBITDA and $26.9 billion in fiscal‑year free cash flow. [20]
For income‑focused investors, that dividend policy can act as a stabilizer in drawdowns, though AVGO remains primarily valued as an AI infrastructure growth name.
VMware and infrastructure software: a second growth engine with headline risk
Broadcom’s post‑VMware identity matters for the stock: investors now evaluate AVGO as a hybrid of semiconductors + enterprise software.
But software has generated its own stream of headlines—and potential risks investors are tracking into 2026:
Customer disputes and litigation
Reuters reported that Fidelity Technology Group sued Broadcom, alleging Broadcom threatened to cut off access to critical VMware software and that losing access could create outages and trading disruptions. Broadcom agreed in a court filing to extend access through January 21 to allow time for judicial review, according to Reuters. [21]
European legal/regulatory challenge to the VMware deal
In Europe, Reuters reported that cloud industry lobby group CISPE challenged the European Commission’s earlier clearance of Broadcom’s VMware acquisition, arguing regulators failed to properly assess competitive impacts in server virtualization. CISPE secretary general Francisco Mingorance called it a “failure of oversight,” while Broadcom disputed the allegations, Reuters said. [22]
Security and operational scrutiny
Separately, VMware products remain a high‑profile surface area for enterprise risk. TechRadar reported Broadcom issued patches for a VMware vulnerability that was described as actively exploited as a zero‑day, underscoring why security issues in the VMware ecosystem can quickly become reputational and operational headlines. [23]
Why this matters to AVGO stock: the infrastructure software segment can support margins and recurring revenue—but customer friction, litigation, and regulatory scrutiny can inject uncertainty into the narrative, particularly when the stock is valued at a premium.
Broadcom stock forecast: what analysts are projecting for AVGO
Analyst forecasts remain broadly constructive, though dispersion is wide—reflecting how much hinges on AI execution and margins.
MarketWatch’s analyst estimates page shows Broadcom with an average recommendation of “Buy” and an average price target around $460, with targets ranging roughly from the low $370s to the high $530s. [24]
Yahoo Finance coverage also pointed to analysts lifting targets after the company’s outlook, reflecting the view that backlog visibility and AI revenue acceleration can support higher earnings power—despite near‑term margin compression concerns. [25]
Important context for readers: price targets are typically 12‑month forward opinions, not guarantees, and they can change quickly after new customer disclosures, margin updates, or macro shifts.
What investors are watching next for Broadcom (AVGO)
With markets open today and the calendar about to flip, the next “decision points” for AVGO are likely to cluster around a few themes:
1) AI mix and margin trajectory
The market reaction has made it clear: revenue beats alone may not be enough if the mix shifts toward lower‑gross‑margin systems. Any incremental clarity from management on how gross margin, operating margin, and software contribution evolve across fiscal 2026 will matter. [26]
2) Customer concentration and “lumpiness”
Investors will watch for signs that AI demand broadens beyond a small handful of hyperscalers (or that backlog converts smoothly without surprise delays). Reuters’ point about backlog being concentrated among a small customer set remains part of the risk checklist. [27]
3) VMware monetization vs. churn/pressure
Lawsuits and regulatory challenges won’t necessarily change results quarter‑to‑quarter, but they influence sentiment about whether VMware becomes a durable cash‑flow machine or a recurring controversy. [28]
4) Macro catalysts that can swing “AI infrastructure” multiples
Into early January, investors are watching the Fed’s December meeting minutes and the market’s evolving expectations for 2026 policy—key drivers for megacap tech multiples and sentiment. [29]
If you’re reading after the closing bell: what to know before the next session
Right now (late morning New York time), U.S. markets are open.
But if you’re catching up later, here are the practical items to check before the next session:
- Where AVGO closed vs. $350: That level has become a psychological reference point after December’s volatility.
- Any late‑day AI headlines: Broadcom is tightly correlated with “AI trade” sentiment, and headlines on hyperscaler capex can move the group quickly. [30]
- Overnight legal/regulatory updates tied to VMware: Litigation and EU challenges can spark sharp, headline‑driven moves even without near‑term earnings impact. [31]
Bottom line
Broadcom stock is ending 2025 with a familiar setup: powerful AI-driven growth signals (including management’s $8.2B AI revenue expectation for Q1 and a $73B backlog) paired with a market newly obsessed with profitability and execution details. [32]
In a post‑Christmas session where indexes are hovering near records, AVGO’s near‑term direction may depend less on whether AI demand is real—and more on whether investors get comfortable that AI hardware expansion won’t structurally erode margins and that VMware’s software economics can offset the mix shift. [33]
Note: This article is for informational purposes only and does not constitute investment advice. Prices cited are time-sensitive and reflect available data as of late morning New York time on Dec. 26, 2025.
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.marketwatch.com, 6. www.prnewswire.com, 7. www.prnewswire.com, 8. www.prnewswire.com, 9. www.prnewswire.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.investopedia.com, 18. www.barrons.com, 19. www.prnewswire.com, 20. www.prnewswire.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.techradar.com, 24. www.marketwatch.com, 25. finance.yahoo.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. www.prnewswire.com, 33. www.reuters.com
