New York – Thursday, December 11, 2025, 5:00 a.m. ET
Broadcom (NASDAQ: AVGO) heads into a pivotal earnings day under pressure. In early U.S. premarket trading, the AI chip and infrastructure giant is indicated down roughly 1–2%, slipping into the low $400s after closing Wednesday at $412.97 on the Nasdaq, a fresh all‑time closing high. [1]
The pullback comes as U.S. stock index futures sink, with Oracle’s disappointing outlook dragging down AI‑linked names and reviving talk of an “AI bubble.” [2] Yet despite this morning’s wobble, Broadcom shares remain up around 70%+ in 2025, leaving the stock near record territory and valued at roughly $1.8–1.9 trillion. [3]
Investors now turn to Broadcom’s fiscal Q4 2025 earnings report after today’s closing bell, a release many on Wall Street see as a referendum on the durability of the AI infrastructure boom. [4]
Premarket snapshot: Broadcom joins the AI sell‑off
Oracle’s weak guidance and big jump in planned AI and cloud spending have spooked investors, sending Dow, S&P 500, and Nasdaq 100 futures lower by roughly 0.4–1.2% in early Thursday trade. [5] Reuters notes that AI‑exposed chipmakers Nvidia and Broadcom are down about 1.5–1.6% in premarket trading, while the Wall Street Journal’s live market blog pegs Broadcom “down nearly 2%” before the open. [6]
That weakness follows a strong run into the print. Broadcom:
- Closed Wednesday at $412.97, up about 8% over the past week, extending its climb from just under $400 at the start of December. [7]
- Has gained roughly 68–74% year‑to‑date, depending on the data provider, as AI optimism and VMware integration have pushed the stock decisively into mega‑cap tech territory. [8]
- Trades on rich multiples: European listing data show a trailing P/E above 100 and forward P/E in the mid‑40s, underscoring how much growth the market has already priced in. [9]
In other words, heading into today’s results Broadcom is priced for perfection—which makes this morning’s modest premarket dip look more like part of a broad AI pullback than a stock‑specific panic.
What Wall Street expects from Broadcom’s Q4 2025
Analyst expectations for Broadcom’s fiscal Q4 2025 are tightly clustered and unambiguously bullish. Across multiple research shops, consensus looks roughly like this: [10]
- Revenue: around $17.4–$17.5 billion, up ~24% year over year
- Adjusted EPS: about $1.87, up roughly 30–32% from a year ago
- AI semiconductor revenue: near $6.2 billion, up about 60–66% year over year
- Total semiconductor revenue: roughly $10.7 billion, +30% YoY
- Infrastructure software revenue (VMware + other): ~$6.7 billion, mid‑teens growth
Broadcom itself has guided to about $17.4 billion in Q4 revenue, and management has telegraphed that AI‑related chip sales could hit roughly $6.2 billion, which would mark the 11th straight quarter of AI revenue growth. [11]
The setup follows a powerful Q3:
- Q3 FY25 revenue reached $16.0 billion, up 22% year over year
- Adjusted EPS came in at $1.69, beating consensus
- AI revenue jumped 63% YoY to $5.2 billion
- Free cash flow surged to a record $7.0 billion for the quarter [12]
Analysts and investors will also be watching Broadcom’s roughly $110 billion order backlog, which Saxo notes as a key indicator of whether hyperscale cloud customers are still adding long‑term AI capacity or starting to digest prior commitments. [13]
The AI engine: Custom chips, TPUs, and hyperscaler demand
The core of the Broadcom story remains its role as a behind‑the‑scenes AI infrastructure giant. Recent deep‑dive research highlights:
- Explosive AI growth: AI revenues surged 220% in fiscal 2024 to $12.2 billion, reaching about 41% of semiconductor revenue, and are projected to climb another ~66% YoY in Q4 FY25. [14]
- Dominance in custom AI ASICs: Broadcom is estimated to control around 70% of the custom AI ASIC market, making it the clear No. 2 AI compute provider behind Nvidia in terms of specialized accelerators. [15]
- Key customers: Broadcom designs custom AI chips and high‑speed networking gear for Google, Meta, Apple, Amazon, Anthropic, and OpenAI, among others. [16]
Google’s Trillium TPU, designed with Broadcom, has become a focal point of the bull case:
- Google trained its Gemini 3 model entirely on these TPUs, rather than GPUs, signaling that custom accelerators are now credible alternatives in top‑tier AI workloads. [17]
- Reports suggest Google wants to rent TPU capacity and potentially sell TPU chips to other hyperscalers like Meta, which could further scale Broadcom’s AI shipments. [18]
On top of Google, multiple sources have reported that Microsoft is shifting parts of its custom Azure AI chip development from Marvell to Broadcom, a move that would deepen Broadcom’s presence across the largest cloud platforms. [19]
One especially bullish TradingNews piece even highlights a 10‑gigawatt AI accelerator and networking contract with OpenAI, estimating more than $100 billion in lifetime value over 2026–2029—figures that, if realized, would be transformative, though they remain third‑party estimates rather than official company guidance. [20]
From a structural perspective, Saxo’s equity research frames Broadcom’s earnings as a “check‑up on the AI hardware stack”—a way to see how fast spending is shifting from Nvidia’s general‑purpose GPUs toward custom ASICs and “plumbing” like Ethernet switches and optical interconnects where Broadcom is strongest. [21]
VMware and the software flywheel
Broadcom is no longer “just a chip stock.” The 2023 acquisition of VMware for about $69 billion has reshaped the company into a hybrid semiconductor + infrastructure software powerhouse. [22]
Key points heading into Q4:
- Infrastructure software, led by VMware, now accounts for around 40–43% of revenue and carries very high gross margins (VMware reported ~93% gross margin in Q3). [23]
- Broadcom is aggressively shifting VMware customers to subscription‑based VMware Cloud Foundation (VCF), aiming to build a durable, high‑margin recurring revenue stream. [24]
- Q3 FY25 infrastructure software revenue reached roughly $6.7–6.8 billion, up mid‑teens year over year, helping push company‑wide EBITDA margins above 60% and free cash flow margins above 40%. [25]
Just hours before earnings, Broadcom is also making product news. A fresh Benzinga report highlights new technology aimed at helping small and mid‑sized businesses build private clouds more easily, extending VCF‑style capabilities to smaller customers and tying VMware software more tightly to Broadcom’s hardware ecosystem. [26]
For investors, the software story does two things:
- It smooths out cyclical semiconductor swings, giving Broadcom a more “bond‑like” stream of subscription cash flow.
- It creates cross‑selling opportunities: customers buying AI hardware and high‑speed networking from Broadcom can also standardize on VMware‑based private or hybrid clouds.
Bulls vs. bears: AI super‑cycle or valuation trap?
The bull case
On the bullish side, Wall Street sentiment is overwhelmingly positive:
- Rosenblatt Securities recently raised its price target from $400 to $440 and reiterated a Buy rating, citing accelerating TPU shipments and strength in data‑center networking. [27]
- HSBC maintains a Buy with a $535 target, arguing that the market still undervalues Broadcom’s ASIC opportunity and CoWoS (advanced packaging) capacity tied to Google’s TPUs. [28]
- UBS lifted its target to $472 earlier this month, seeing “explosive” AI demand and calling Broadcom a major long‑term winner in AI infrastructure. [29]
TipRanks data show 24 Buy ratings versus just two Holds, with an average price target around $432, implying mid‑single‑digit upside from Wednesday’s close. [30] CoinCentral notes a similar picture: 23 Buys and two Holds with an average target near $425, and Morningstar’s fair‑value estimate near $365, suggesting strong but not uniform optimism. [31]
Longer‑term, several analysts expect Broadcom’s AI revenue to roughly double to around $40 billion by fiscal 2026, potentially growing faster than Nvidia’s AI revenue from that point as TPUs and custom ASICs scale out across cloud customers. [32]
A TradingNews forecast goes further, projecting 35% upside to $528 based on ASIC leadership, VMware‑driven recurring software income, and major multi‑year AI infrastructure contracts. [33]
The bear (or at least cautious) case
Even bullish research often carries a warning label: valuation and cyclicality.
- European listing data show Broadcom trading at over 100x trailing earnings and ~46x forward earnings, far above its historical averages and above many peers in semis and software. [34]
- MarketBeat’s compilation of 35 analyst targets shows an average 12‑month target of about $392, actually below the current U.S. share price, hinting that some analysts believe near‑term upside is limited after the 2025 rally. [35]
- Quantitative fair‑value models referenced in recent research suggest Broadcom could be 30–35% overvalued, with intrinsic value estimates around $260–270 per share, even after accounting for AI momentum. [36]
On the fundamentals side, analysts are watching margin pressure:
- PredictStreet and Seeking Alpha previews both flag that Q4 gross margins are likely to be lower year on year, as lower‑margin custom AI accelerators and wireless components grow as a share of sales. [37]
- While management has guided to EBITDA margins around 67%, any hint that profitability is trending down structurally—not just temporarily—could force a rethink of the “high‑quality compounder” narrative. [38]
Add in the risk of AI capex moderation—if hyperscalers decide they’ve overbuilt capacity for now—and you have the skeleton of the bear case: a fantastic business, but one that might be front‑loading several years of growth into today’s valuation. [39]
Options market: bracing for a post‑earnings swing
Options activity suggests traders are bracing for a sizable—but not extreme—post‑earnings move:
- An Investopedia‑summarized options study shows traders pricing in roughly a 6–7% one‑day swing after Broadcom reports, based on implied volatility around near‑term at‑the‑money options. [40]
- That’s smaller than the average move of about 10–11% following the last few earnings reports, reflecting both the stock’s larger size and somewhat more measured expectations. [41]
Heavy open interest around strike prices near $400 and $430 suggests traders see those levels as key battlegrounds for the short term. [42]
Key questions for Broadcom’s earnings call tonight
When Broadcom reports after today’s close, investors are likely to focus less on whether the company beats consensus by a few cents and more on what the numbers say about the AI cycle. Based on recent research and commentary, here are the big questions to watch: [43]
- Is AI revenue still accelerating?
- Does Q4 AI semiconductor revenue land at or above the $6.2 billion mark?
- Does management guide to continued 50–60%+ AI growth in fiscal 2026, or does the growth curve begin to flatten?
- What happens to the $110 billion backlog?
- Are hyperscalers increasing orders, holding flat, or trimming commitments?
- Any signs that big customers like Google or Microsoft are pausing deployments would reverberate across the AI hardware space.
- How tight are margins—and for how long?
- Do gross and EBITDA margins match guidance despite the shift toward cost‑optimized custom accelerators?
- Does management frame the margin pressure as a temporary mix effect or something more structural?
- VMware integration and private‑cloud demand
- How quickly are customers migrating to VMware Cloud Foundation subscriptions?
- What does demand look like for newer offerings aimed at smaller and mid‑sized businesses adopting private cloud, and can that become a meaningful growth vector?
- Capital allocation and leverage
- With tens of billions in projected annual free cash flow and sizable debt from VMware, how aggressively will Broadcom prioritize deleveraging vs. buybacks vs. dividend growth? [44]
- The GPU–ASIC balance
- How do Broadcom’s comments square with the broader AI supply chain—Nvidia’s GPU dominance versus the rise of custom ASICs, and where Broadcom expects its networking and ASIC share to land as the AI stack matures? [45]
The answers to these questions will shape whether investors see any post‑earnings dip as a buy‑the‑pullback opportunity in a structural AI winner, or as confirmation that too much optimism is already priced in.
Bottom line: A small premarket crack in a giant AI story
At 5:00 a.m. ET, Broadcom’s modest premarket drop looks less like a company‑specific warning signal and more like collateral damage from Oracle‑driven AI jitters and a broader tech risk‑off move, after an extraordinary run into earnings. [46]
The stock now sits at the intersection of several powerful forces:
- A historic AI infrastructure build‑out where Broadcom is a central supplier of custom accelerators and networking
- A software transformation via VMware, pushing recurring revenue and very high margins
- And a valuation that assumes years of strong execution, leaving little room for disappointment
For traders, today is about volatility and how far the stock swings after the numbers hit. For longer‑term investors, Broadcom’s Q4 call is likely to be one of the clearest real‑time snapshots yet of how the AI hardware stack is evolving—and whether the biggest cloud players are still flooring the accelerator on AI infrastructure. [47]
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Always do your own research or consult a licensed financial advisor before making investment decisions.
References
1. www.marketscreener.com, 2. www.streetinsider.com, 3. www.smartkarma.com, 4. www.home.saxo, 5. www.tipranks.com, 6. www.streetinsider.com, 7. www.investing.com, 8. coincentral.com, 9. stockanalysis.com, 10. www.tipranks.com, 11. www.home.saxo, 12. markets.financialcontent.com, 13. www.home.saxo, 14. markets.financialcontent.com, 15. markets.financialcontent.com, 16. coincentral.com, 17. coincentral.com, 18. coincentral.com, 19. coincentral.com, 20. www.tradingnews.com, 21. www.home.saxo, 22. markets.financialcontent.com, 23. markets.financialcontent.com, 24. markets.financialcontent.com, 25. markets.financialcontent.com, 26. stockanalysis.com, 27. www.tipranks.com, 28. www.tipranks.com, 29. finance.yahoo.com, 30. www.tipranks.com, 31. coincentral.com, 32. coincentral.com, 33. www.tradingnews.com, 34. stockanalysis.com, 35. www.marketbeat.com, 36. markets.financialcontent.com, 37. markets.financialcontent.com, 38. markets.financialcontent.com, 39. www.tradingnews.com, 40. www.tipranks.com, 41. www.tipranks.com, 42. www.tipranks.com, 43. www.home.saxo, 44. markets.financialcontent.com, 45. www.home.saxo, 46. www.streetinsider.com, 47. www.home.saxo
