Meta description: Broadcom stock is under pressure on Dec. 12, 2025 after strong earnings and upbeat guidance—here’s what AI demand, margin outlook, VMware news, and Wall Street forecasts mean for AVGO.
Broadcom Inc. (Nasdaq: AVGO) is at the center of the AI trade again on December 12, 2025—but not in the straightforward “beats and raises, stock rallies” way investors have gotten used to this year.
Despite reporting record revenue and issuing above-consensus first-quarter guidance, Broadcom shares are choppy and weaker in early trading, with investors focusing on one key issue: profitability pressure from a fast-growing AI mix. Reuters reported Broadcom warned gross margins would fall as AI becomes a larger portion of sales, contributing to a roughly 5% premarket drop. [1]
As of 11:43:52 UTC on Dec. 12, AVGO last traded around $406.37.
Below is a full roundup of today’s Broadcom stock news, including the latest earnings details, management guidance, the margin debate driving the selloff, and the wave of fresh analyst price-target increases hitting the tape on Dec. 12.
Broadcom earnings recap: record revenue and strong cash flow
Broadcom’s fiscal fourth quarter ended November 2, 2025, capped a year in which the company has expanded beyond its traditional connectivity and enterprise software base into a core supplier for hyperscalers building AI infrastructure.
From the company’s results release:
- Q4 revenue:$18.015 billion (up from $14.054 billion a year earlier)
- Q4 GAAP net income:$5.591 billion
- Q4 GAAP diluted EPS:$1.12
- Q4 non‑GAAP diluted EPS:$1.95
- Q4 free cash flow:$7.466 billion (about 41% of revenue) [2]
Broadcom’s segment mix stayed heavily weighted toward semiconductors, with infrastructure software still a major profit engine:
- Semiconductor Solutions revenue (Q4):$11.072 billion
- Infrastructure Software revenue (Q4):$6.943 billion [3]
Management also highlighted strength in profitability and cash generation on the earnings call transcript, including record quarterly operating income and high consolidated gross margin in Q4 (though the forward outlook is where the debate starts). [4]
Guidance: Broadcom forecasts $19.1B next quarter—AI drives the upside
Broadcom guided first-quarter fiscal 2026 revenue to approximately $19.1 billion, which multiple reports noted is above Wall Street expectations. [5]
From the earnings call transcript, Broadcom provided a more granular split:
- Q1 semiconductor revenue forecast: ~$12.3B
- Q1 AI semiconductor revenue forecast: ~$8.2B (about 100% YoY growth)
- Q1 infrastructure software forecast: ~$6.8B [6]
Broadcom also guided adjusted EBITDA at ~67% of revenue for Q1. [7]
That combination—strong top-line growth plus eye-popping AI acceleration—is exactly why AVGO has become a bellwether for sentiment around “custom silicon” (ASICs/XPUs) and AI networking in 2025. [8]
Why Broadcom stock is falling anyway: margin dilution meets “AI payoff” anxiety
The catalyst for today’s pullback isn’t demand. It’s mix and margin.
Broadcom’s CFO said the company expects Q1 consolidated gross margin to be down about 100 basis points sequentially, “primarily reflecting a higher mix of AI revenue.” [9]
Reuters also reported investor concerns that:
- AI system sales can carry lower gross margins
- Broadcom’s AI revenue is concentrated in a small set of customers
- Margin pressure could rise as system sales become a bigger share later on [10]
The timing matters. Reuters noted that broader “AI bubble” fears have been flaring up again, with investors reassessing the pace at which massive AI spending turns into profits across the ecosystem—especially after Oracle’s recent volatility added to “show-me” sentiment around AI monetization. [11]
In other words: Broadcom delivered the growth, but the market is now demanding clearer profit visibility as AI becomes a larger portion of revenue.
“AI bellwether” status: Broadcom’s customer concentration is a feature—and a risk
Broadcom’s AI narrative has two sides:
The bull case: Broadcom is deeply embedded with hyperscale customers designing custom accelerators and building the switching and networking fabric AI data centers need—positioning AVGO as a diversified alternative to pure-play GPU exposure. [12]
The bear case (or at least the “why the stock is down today” case): Customer concentration cuts both ways, and margin dilution becomes more visible as the AI mix rises.
Reuters reported CEO Hock Tan referenced a $73 billion order backlog anticipated to ship over the next 18 months, with the backlog largely coming across five customers. [13]
Some outlets and analyst write-ups on Dec. 12 also pointed to large follow-on orders tied to AI customers (including Anthropic) as part of the demand story, though details vary by report. [14]
Analyst forecasts (Dec. 12, 2025): price targets jump, many cluster around $450–$500
One of the biggest “day-of” developments for AVGO is the sheer volume of analyst updates dated December 12, 2025—many raising targets sharply even as the stock pulls back on margin commentary.
Notable published target increases (with ratings)
- Morgan Stanley: target raised to $462 from $443; Overweight maintained. [15]
- Evercore ISI: target raised to $490 from $403; Outperform maintained. [16]
- Baird: target raised to $420 from $300; Outperform maintained. [17]
- Jefferies: target raised to $500 from $480; Buy maintained. [18]
- KeyBanc: target raised to $500 from $460; Overweight maintained. [19]
- Truist: target raised to $500 (article notes higher AI outlook assumptions and margin debate). [20]
- Bank of America: target raised to $500 (and discussed risks such as backlog expectations and gross margin pressure in forward years). [21]
Additional target changes circulating in the morning flow
Market listings on Dec. 12 also showed a wider set of updates (examples include Barclays $500, JPMorgan $475, Goldman Sachs $450, TD Cowen $450, Deutsche Bank $430, Piper Sandler $430, Wells Fargo $410), underscoring how broadly Wall Street is refreshing AVGO models after the quarter. [22]
What it signals: Even with the margin debate, many analysts appear to view the post-earnings pullback as a valuation reset—not a demand problem. That doesn’t mean AVGO must go up from here, but it explains why targets are rising into weakness. [23]
VMware and infrastructure software: strong segment economics, but pricing/friction remains in focus
Broadcom’s infrastructure software business (anchored by VMware) remains a major pillar—especially for margins—because software gross margins are far higher than hardware.
On the earnings call transcript, Broadcom reported:
- Infrastructure software revenue of $6.9B in Q4 (up 19% YoY)
- Infrastructure software gross margin around 93%
- Infrastructure software operating margin around 78%
- And said the year ended with $73B of infrastructure software backlog, up from $49B a year earlier [24]
But VMware is also where reputational and regulatory risks can surface.
EU legal/regulatory headline
Reuters reported that cloud industry group CISPE has argued EU antitrust regulators erred in clearing Broadcom’s VMware deal, taking its challenge to the EU’s General Court. Broadcom said it strongly disagreed with CISPE’s allegations. [25]
Product availability and customer friction in EMEA
Separately, The Register reported Broadcom told it that VMware vSphere Foundation is no longer available in some EMEA countries, with affected customers warning of steep cost increases and evaluating alternatives. [26]
Techzine reported similar details and emphasized the pressure on smaller VMware customers versus Broadcom’s push toward VMware Cloud Foundation. [27]
For AVGO shareholders, the key takeaway is that VMware is both:
- A profitability stabilizer (high margins, recurring revenue), and
- A headline risk (pricing changes, customer churn narratives, and regulatory scrutiny). [28]
Dividend and shareholder returns: Broadcom raises payout again
Broadcom also announced a 10% increase in its quarterly dividend to $0.65 per share.
- Record date:December 22, 2025
- Payable date:December 31, 2025 [29]
On the earnings call transcript, Broadcom additionally referenced ongoing shareholder returns and noted remaining authorization under its repurchase program (as described during the call). [30]
What to watch next for AVGO stock
With the Q4 print now digested, the next leg for Broadcom stock likely hinges on a few measurable items:
- Gross margin trajectory: Will margin pressure stabilize after this AI mix shift, or deepen as more systems ship? [31]
- AI revenue execution: Broadcom is forecasting $8.2B AI semiconductor revenue next quarter—delivery against that number matters. [32]
- Customer concentration signals: The market is sensitive to how dependent AI growth is on a small set of buyers. [33]
- VMware renewals and sentiment: Revenue can stay strong while customer narratives worsen—both can affect valuation multiples. [34]
- Macro + “AI trade” mood: Reuters tied AVGO’s reaction to broader AI payoff jitters in U.S. equities and index futures. [35]
Bottom line
Broadcom’s fundamental story on Dec. 12, 2025 is still about rapid AI-driven growth and strong cash generation—reinforced by a revenue outlook that beat expectations and a bigger dividend.
But today’s stock reaction highlights a new market regime for AI infrastructure names: it’s not enough to show demand. Investors are now pressing for profit durability as the AI mix expands—and they’re punishing any hint that the growth is less profitable than hoped in the near term. [36]
References
1. www.reuters.com, 2. markets.ft.com, 3. markets.ft.com, 4. www.investing.com, 5. www.reuters.com, 6. www.investing.com, 7. markets.ft.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.barrons.com, 15. www.investing.com, 16. www.investing.com, 17. www.investing.com, 18. www.investing.com, 19. www.investing.com, 20. www.investing.com, 21. www.investing.com, 22. www.marketscreener.com, 23. www.investing.com, 24. www.investing.com, 25. www.reuters.com, 26. www.theregister.com, 27. www.techzine.eu, 28. www.investing.com, 29. markets.ft.com, 30. www.investing.com, 31. www.reuters.com, 32. www.investing.com, 33. www.reuters.com, 34. www.investing.com, 35. www.reuters.com, 36. www.reuters.com
