Broadcom's revenue and profit both reached record highs in the fourth fiscal quarter, increasing nearly 30% and 40% year-over-year respectively; its revenue guidance for the first fiscal quarter showed a growth rate consistent with the previous quarter, while AI chip revenue exceeded market expectations by nearly 20%. Broadcom announced a 10% increase in its quarterly dividend for this fiscal year, setting an all-time high for its annual dividend. The CEO noted a backlog of $73 billion worth of AI product orders, adding that this is the "minimum value," and mentioned receiving an $11 billion order from Anthropic in the fourth fiscal quarter. However, he warned that gross margins are narrowing due to AI product sales. Broadcom’s share price initially rose 4% after-hours but then reversed course and is now down nearly 5%.
NVIDIA's challenger and ASIC chip giant $Broadcom (AVGO.US)$ once again demonstrated with its quarterly results and guidance just how explosive the demand for artificial intelligence (AI) data center equipment is, bringing explosive growth to Broadcom’s recent performance. However, the backlog of AI orders did not meet investors' expectations.
Broadcom reported that revenue and earnings for the previous fiscal quarter both accelerated compared to the prior quarter, and its revenue guidance for the current fiscal quarter exceeded Wall Street expectations. Benefiting from strong sales of custom AI chips amid the AI infrastructure boom, Broadcom’s AI chip revenue grew by more than 70% in the previous fiscal quarter, an increase of over 10 percentage points from the prior quarter’s growth rate. Broadcom also expects its AI chip revenue for the current fiscal quarter to double, significantly surpassing market expectations.
Broadcom’s Chief Financial Officer (CFO), Kirsten Spears, simultaneously announced a 10% increase in the quarterly dividend for the current fiscal year, or fiscal year 2026, to $0.65 per share, raising the annual dividend to a record high of $2.60 per share. This marks the fifteenth consecutive year of annual dividend increases since the company began paying dividends in fiscal year 2011.
After the earnings report was released, Broadcom’s stock price (AVGO), which had closed down 1.6% on Thursday, quickly surged into positive territory during after-hours trading on Wall Street, rising as much as 4% before reversing course and currently falling nearly 5%.
Some commentary noted that the stock’s reversal was due to Broadcom CEO Hock Tan stating during the earnings call that the company currently has a backlog of AI product orders worth $73 billion, which will be delivered over the next six quarters. This order volume disappointed some investors. Although Tan clarified that this is only a “minimum value” and predicted that the actual size would grow as more orders come in, the market reaction remained cautious.
Prior to the earnings announcement, an article on Wall Street Wisdom mentioned that some analysts were concerned that even if Broadcom’s results were outstanding, they could still trigger "sell the fact" trades. Ryuta Makino, an analyst at Gabelli Funds, anticipated that, regardless of Broadcom’s results or guidance, "everyone is long, and perhaps some will sell to take profits."
On Thursday, December 11, Eastern Time, Broadcom released its financial data for the fourth fiscal quarter of fiscal year 2025 (referred to as “Q4”), which ended on November 2, 2025, and provided earnings guidance for the first fiscal quarter of fiscal year 2026 (“Q1”).
1) Key Financial Data:
Revenue: Q4 revenue was $18.02 billion, up approximately 28% year-over-year, surpassing analysts’ expectations of $17.47 billion and the company’s guidance of $17.4 billion. The previous quarter saw year-over-year growth of 22%.
Net Income: On a non-GAAP basis, adjusted Q4 net income was $9.71 billion, up approximately 39% year-over-year, compared to 37.3% year-over-year growth in the previous quarter.
EBITDA: Adjusted EBITDA for the fourth quarter was $12.22 billion, increasing by 34% year-over-year, with a margin of 68%, compared to the company’s guidance of 67%. The previous quarter saw a year-over-year increase of 30.1% and a margin of 67.1%.
EPS: Adjusted earnings per share (EPS) for the fourth quarter was $1.95, up 37% year-over-year, surpassing analysts’ expectations of $1.87. The prior quarter saw a year-over-year growth of 36.3%.
2) Segment Business Data:
Semiconductor Solutions: Revenue from semiconductor solutions, including ASIC, reached $11.07 billion, growing by 34.5% year-over-year and accounting for 61% of total revenue. Analysts had expected $10.74 billion, while the prior quarter recorded a year-over-year growth of 26% and accounted for 57% of total revenue.
Infrastructure Software: Revenue from infrastructure software, including VMware, amounted to $6.94 billion, increasing by approximately 19% year-over-year and representing 39% of total revenue. The previous quarter showed a year-over-year growth of 17% and contributed 43% to total revenue.
3) Guidance:
Revenue: First-quarter revenue is projected to be approximately $19.1 billion, exceeding analysts’ expectations of $18.48 billion.
EBITDA: The EBITDA margin for the first quarter is forecasted to be around 67%.
Q4 Revenue and Profit Both Hit Record Highs; Q1 AI Chip Revenue Growth Accelerates
The earnings report shows that Broadcom’s revenue and EBITDA profit in the fourth quarter both reached record highs for a single quarter, with growth rates accelerating compared to the previous quarter. Revenue growth increased from 22% in the previous quarter to just over 28%, while EBITDA growth rose from 37% to 39%.
Hock Tan stated that the record-breaking total revenue in the fourth quarter was driven by both AI semiconductor solutions and infrastructure software. According to the earnings report, revenue from semiconductor solutions, including ASIC, exceeded analysts’ expectations and accounted for more than 60% of total revenue.
Hock Tan specifically noted that AI chip revenue in Q4 grew by 74% year-over-year. This growth rate is significantly higher than the already above-expected 63% increase from the previous quarter and exceeds the guidance Hock Tan disclosed during the earnings call at that time. He had then projected that Q4 AI chip revenue would rise to $62 billion, implying a year-over-year increase of 66% and a quarter-over-quarter increase of 19%.
Based on Broadcom's earnings guidance, Q1 revenue is expected to grow approximately 28% year-over-year, matching the Q4 growth rate, with a sequential increase of about 6%. Although this represents a slowdown from the 13% sequential growth in Q4, it still surpasses analyst expectations. Analysts forecasted a nearly 24% year-over-year revenue increase for Q1.
Hock Tan stated that AI chip revenue in Q1 will double year-over-year, reaching $82 billion. This implies that AI chips will contribute over 40% of the company’s revenue, nearly 19% higher than the market consensus of $69 billion, and the year-over-year growth rate will improve by 26 percentage points compared to Q4.
New Anthropic Order Secured but AI Products Pressure Margins
During the conference call, Hock Tan revealed that Broadcom secured an $11 billion order from Anthropic, a major rival of OpenAI, in Q4, following another significant $10 billion order in Q3. He also mentioned that Broadcom signed an additional $1 billion client order, without disclosing the client’s identity.
The rapid growth in Broadcom’s AI revenue has primarily been driven by surging demand for custom chips and data center networking chips. During this call, Hock Tan warned that sales of AI products are narrowing the company’s overall profit margin.
Hock Tan sought to explain to investors that the $73 billion backlog serves as a baseline figure, with the actual scale set to expand as new orders come in. He said, “Depending on the specific product, our lead times may range from six months to one year.”
Google and OpenAI Emerge as Key Clients
Broadcom’s share price has surged over 170% since hitting a low on April 4, ranking tenth among S&P 500 components in terms of gains during the same period. Since releasing its Q3 earnings report in early September, the stock has risen approximately 30%, bringing its market capitalization to $1.91 trillion. As of Wednesday’s close this week, the stock has gained around 75% since the start of 2025.
This rally has pushed Broadcom’s valuation to unprecedented levels. By Wednesday, its forward price-to-earnings ratio reached approximately 42 times, far exceeding the ten-year average of 17 times. Currently, Broadcom’s valuation surpasses that of all Mag 7 companies except Tesla, including NVIDIA, which holds the highest individual market cap.
Broadcom's AI business is highly dependent on a few hyperscale cloud service provider customers, particularly Google. Broadcom manufactures custom Tensor Processing Unit (TPU) chips for Google, and Gemini 3, the company’s most powerful AI model released three weeks ago by Google, was entirely trained on TPU chips, becoming a recent positive development for Broadcom.
Shaon Baqui, technology research analyst at Janus Henderson Investors, stated that Broadcom is 'deeply integrated with the Google ecosystem, and we have all witnessed the latest success of Gemini 3 as well as Google’s achievements. Given its recent performance, market expectations have clearly been raised, but for good reason.'
Emarketer analyst Jacob Bourne stated: 'Given Google’s market position, Broadcom will benefit from the growing interest in specialized, energy-efficient chips, and its networking portfolio positions it as a key supplier in the construction of large-scale data centers supporting AI infrastructure.'
Compared to traditional giants like Google, emerging players in the AI field such as OpenAI and Anthropic have further bolstered Broadcom’s upward momentum.
During the earnings call in September this year, Hock Tan revealed that Broadcom’s custom AI accelerator XPU had added another qualified customer. This fourth customer brought an order worth $10 billion. At the time, some media outlets referred to this 'mysterious' client as OpenAI. A month later, on October 13, OpenAI announced an agreement with Broadcom to begin deploying custom AI chips co-developed with Broadcom starting next year. This confirmed the addition of a significant new member to Broadcom’s customer base.
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Editor/jayden