Broadcom Inc. (NASDAQ: AVGO) is heading into the final trading stretch of 2025 with investors trying to answer a deceptively simple question: is the recent pullback in Broadcom stock a normal “holiday hangover” after a huge run—or the market repricing what AI profits actually look like when the chips ship?
As of early Friday, Dec. 26, Broadcom shares were trading around $350 in premarket activity, roughly flat-to-slightly higher on the session at the time of writing.
That price level matters because it sits well below the early-December highs and reflects a sharp change in sentiment after Broadcom’s latest earnings: the company delivered strong results and upbeat revenue guidance, but also warned that the surge in AI-related sales can pressure gross margins in the near term. [1]
Below is a full roundup of what’s driving Broadcom stock on Dec. 26, 2025—including the newest headlines, the most-cited forecasts, and the key debates shaping how Wall Street is valuing AVGO into 2026.
Broadcom stock today: AVGO returns from the Christmas break near $350
U.S. markets are back to regular trading after the holiday pause—coming off an early close on Christmas Eve and a full closure on Christmas Day. [2]
That calendar wrinkle helps explain why much of today’s conversation is less about fresh company announcements and more about positioning: analysts updating targets, investors revisiting the AI thesis, and institutions digesting what Broadcom’s “AI backlog” really signals for 2026 revenue.
There’s also a seasonal footnote traders love to bring up: historically, the first trading day after Christmas (often Dec. 26) has tended to be constructive for equities, feeding the “Santa Claus rally” narrative. [3]
Broadcom, however, isn’t trading on holiday vibes. It’s trading on math—specifically, the math of AI margins.
The core catalyst: Broadcom’s Q4 results were strong, and guidance was higher—but margins stole the spotlight
Broadcom’s most recent earnings release (for Q4 fiscal 2025, quarter ended Nov. 2, 2025) was objectively muscular:
- Revenue:$18.015 billion, up 28% year over year
- Non-GAAP diluted EPS:$1.95
- Adjusted EBITDA:$12.218 billion (about 68% of revenue)
- Free cash flow:$7.466 billion (about 41% of revenue) [4]
For the first quarter of fiscal 2026, Broadcom guided to approximately $19.1 billion in revenue, again implying ~28% year-over-year growth. [5]
The big AI headline was growth: CEO Hock Tan said Q4 performance was driven “primarily” by AI semiconductor revenue rising 74% year over year, and 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. [6]
So why did the stock pull back sharply after a beat-and-raise setup?
Because Broadcom also told investors—plainly—that the mix shift toward AI can reduce margins in the near term.
Reuters reported CFO Kirsten Spears saying the company expects first-quarter consolidated gross margin to be down ~100 basis points sequentially, “primarily reflecting a higher mix of AI revenue.” [7]
In other words: Broadcom is selling more of the hottest product category in tech, but those incremental dollars may not carry the same margin profile as what investors had mentally priced in.
The number everyone is dissecting: Broadcom’s $73 billion AI backlog
One of the most repeated figures in the current Broadcom stock narrative is the company’s disclosed $73 billion AI backlog, which management described as shipments anticipated over roughly the next 18 months (six quarters). [8]
That backlog has become a Rorschach test:
- Bullish interpretation: it’s a visibility machine—proof that demand is real, booked, and large enough to reshape Broadcom’s earnings power.
- Skeptical interpretation: it may be too concentrated, potentially too conservative, and may include more system-level revenue with lower gross margins than some investors expected.
Reuters highlighted that a key concern is customer concentration—noting commentary that the backlog was “still coming from only five customers,” and that system sales are expected to become a larger portion of sales in later quarters (notably the second half of fiscal 2026), which could weigh on gross margin. [9]
That’s the debate in one sentence: Broadcom’s AI opportunity looks gigantic—but the path from bookings to high-margin earnings may be bumpier than the market initially assumed.
New today: Reuters flags Broadcom’s OpenAI partnership as AI infrastructure spending accelerates
While Broadcom itself hasn’t dropped a brand-new headline today, Reuters did publish a broad roundup on Dec. 26 of the multi‑billion‑dollar deals reshaping AI infrastructure—and included Broadcom in the center of the story.
Reuters said OpenAI has partnered with Broadcom to produce its first in-house AI processors, listing it among recent landmark AI, cloud, and chip deals. [10]
That matters for AVGO investors for two reasons:
- It reinforces Broadcom’s role as a prime contractor in the “custom silicon” wave—where hyperscalers and AI labs want alternatives and complements to Nvidia’s general-purpose GPUs.
- It keeps Broadcom attached to the most consequential demand driver in semiconductors right now: AI compute buildouts (not just in chips, but also in the networking fabric that makes AI clusters usable at scale).
Broadcom’s own commentary has positioned its AI semiconductor growth as a combination of custom accelerators and Ethernet switching—a pairing that turns the company from “just another chipmaker” into a supplier of the plumbing inside next-generation AI data centers. [11]
VMware: the steady cash engine—and a real regulatory overhang in Europe
Broadcom isn’t only an AI semiconductor story. It’s also a software cash-flow story—especially since its VMware acquisition.
In the same earnings release, Broadcom reported Infrastructure Software revenue of $6.943 billion in Q4 2025 (up 19% year over year), while Semiconductor Solutions revenue was $11.072 billion. [12]
Investors often view VMware (and related software businesses) as the stabilizer: recurring revenue characteristics, strong margins, and a buffer against the cyclical parts of semiconductors.
But VMware has also brought political and regulatory heat—particularly in Europe.
Reuters reported that the cloud industry group CISPE told Europe’s General Court that EU antitrust regulators failed to properly analyze competition risks when clearing Broadcom’s $69 billion VMware acquisition (approved in 2023). Broadcom said it strongly disagreed with CISPE’s allegations, Reuters said. [13]
For Broadcom stock, this is not a day-to-day trading catalyst, but it’s part of the broader “risk stack” investors weigh when deciding how much premium AVGO deserves as a mega‑cap AI winner.
Analyst forecasts for Broadcom stock: where Wall Street targets sit heading into 2026
A noticeable theme in today’s Broadcom coverage is that, despite the post-earnings volatility, many analysts remain constructive on AVGO into 2026—often framing the pullback as a valuation reset rather than a broken story.
Here are the most-cited target updates and consensus snapshots circulating into Dec. 26:
Major bank moves: Morgan Stanley and Truist lift targets
Investing.com reported that Morgan Stanley raised its price target to $462 from $443 while maintaining an Overweight rating, pointing to strong results and AI momentum. The same report noted Truist raised its target to $500 and kept a Buy rating, citing AI revenue coming in above guidance (reported as $6.5 billion vs. $6.2 billion expected). [14]
“Consensus target” data: mid-$400s (with a wide range)
A Nasdaq.com article (sourced to Fintel) reported that Broadcom’s average one-year price target was revised to $465.27 as of Dec. 21, up from $411.31 earlier in the month, with targets ranging from roughly $276 to $562. [15]
TipRanks, in an article published today, put the average price target at $455.63 and described a “Strong Buy” consensus rating (27 Buys, 2 Holds), while highlighting fresh target hikes such as $485 from Benchmark and $475 from UBS in its roundup. [16]
Big-picture sentiment: banks still like AI semis into 2026
Investopedia reported that Bank of America and Jefferies reiterated bullish positioning on semiconductor names heading into 2026, listing Broadcom among top large‑cap picks; the piece also noted Jefferies had a notably high target for Broadcom (street‑high in that write‑up). [17]
Takeaway: Even with debate about margins and backlog framing, the sell-side’s center of gravity still sits in the “AI buildout continues” camp—and many targets cluster in the mid-$400s.
What could move Broadcom stock next: the catalyst map for early 2026
Here are the forward-looking items investors are watching most closely as of Dec. 26:
1) Proof that backlog converts to revenue on schedule
Broadcom has told investors it has a large, defined AI backlog; the next key is conversion cadence—how quickly those bookings turn into shipped systems and recognized revenue, and what the margin profile looks like along the way. [18]
2) Gross margin trajectory (and whether the “AI mix headwind” fades)
Management’s margin warning wasn’t subtle: ~100 bps of sequential gross margin pressure tied to AI mix. Investors will be looking for evidence that:
- margin compression is temporary (mix-related), not structural (pricing/competition-related), and
- software profitability continues to offset hardware mix shifts. [19]
3) VMware monetization and customer stability
The VMware transition is a massive earnings lever—both upside (recurring revenue, cross-sell, standardization) and downside (customer churn, pricing backlash, regulatory noise). The CISPE legal challenge in Europe adds a layer of uncertainty that may linger in headlines. [20]
4) OpenAI and the “custom silicon” race
Reuters’ Dec. 26 AI-deals roundup reinforces that the custom silicon arms race is intensifying, with OpenAI’s in-house processor push tied to partners like Broadcom. If more details emerge—timelines, volumes, and competitive positioning—AVGO could trade on those incremental signals. [21]
Broadcom bull case vs. bear case: the debate powering AVGO’s valuation
The bull case for Broadcom stock in 2026
The optimistic thesis is straightforward:
Broadcom is building a rare “two-engine” model—AI semiconductor growth plus high-cash-flow infrastructure software. The company is guiding to strong Q1 revenue, expecting $8.2 billion in AI semiconductor revenue, and has flagged a $73 billion AI backlog—all while generating substantial free cash flow. [22]
If the AI buildout persists (and if Broadcom keeps expanding its custom silicon footprint), the market may treat the margin wobble as the cost of entering a larger TAM (total addressable market) rather than as a permanent profit impairment.
The bear case for Broadcom stock in 2026
The skeptical view isn’t “AI is fake.” It’s more precise—and therefore more dangerous:
- AI revenue may be growing fast, but it could be less profitable than the market assumed, at least during the system ramp. [23]
- Backlog visibility can be misleading if it’s concentrated among a few hyperscalers; Reuters explicitly highlighted the five-customer concentration concern. [24]
- VMware-related regulatory and customer pushback can flare up unexpectedly, particularly in Europe. [25]
In that framing, the stock’s post-earnings drop is not an overreaction—it’s the market repricing the probability distribution of outcomes.
Dividend update: Broadcom raises payout again, with a Dec. 31 payment date
One concrete, shareholder-friendly item that isn’t up for debate: Broadcom raised its quarterly dividend.
Broadcom announced a 10% increase in its quarterly common stock dividend to $0.65 per share, payable Dec. 31, 2025 to shareholders of record as of Dec. 22, 2025. The company also stated a target fiscal 2026 annual common dividend of $2.60 per share. [26]
For income-focused investors, Broadcom remains more “dividend grower” than “high-yield stock”—but the consistency of increases is part of what supports its quality premium versus many pure-play semis.
Bottom line on Dec. 26: Broadcom stock is still an AI bellwether—just a more complicated one now
Broadcom stock enters the last week of 2025 near $350, with the market balancing three truths that can coexist (even if traders hate that):
- Broadcom’s AI business is growing extremely fast, and management is guiding to continued momentum. [27]
- The near-term profitability mix is messy, and management explicitly warned margins can dip as AI becomes a larger share of revenue. [28]
- Wall Street’s mainstream analyst view remains broadly bullish into 2026, with many targets clustered in the mid-$400s—even after the pullback. [29]
For investors, the next phase of the AVGO story is less about whether AI demand exists—and more about how efficiently Broadcom converts that demand into durable, high-quality earnings while VMware continues to mature under its ownership.
References
1. www.reuters.com, 2. www.nasdaq.com, 3. www.marketwatch.com, 4. www.prnewswire.com, 5. www.prnewswire.com, 6. www.prnewswire.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.prnewswire.com, 12. www.prnewswire.com, 13. www.reuters.com, 14. www.investing.com, 15. www.nasdaq.com, 16. www.tipranks.com, 17. www.investopedia.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.prnewswire.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.prnewswire.com, 27. www.prnewswire.com, 28. www.reuters.com, 29. www.investing.com
