Broadcom Stock Price Forecast - AVGO 13% Post-Earnings Slide vs. $73B AI Backlog at ~$350

Broadcom (NASDAQ:AVGO) – AI Infrastructure Leader On A Rare Reset

Earnings Momentum And Margin Profile For NASDAQ:AVGO

Broadcom closed fiscal 2025 with scale and profitability that look more like a software franchise than a traditional chipmaker. Quarterly revenue in Q4 reached roughly $18.0 billion, up around 28% year over year, while full-year revenue landed near $63.8–63.9 billion, an increase of about 24% versus the prior year. The mix remains anchored in two pillars. Semiconductor solutions revenue climbed from about $8.23 billion to roughly $11.07 billion in Q4, a 35% jump, driven largely by AI and custom silicon demand. Infrastructure software moved from around $5.82 billion to approximately $6.94 billion, about 19% year-over-year growth, taking total quarterly revenue from roughly $14.05 billion to about $18.02 billion. Profitability scaled even faster than revenue. Q4 gross profit was about $13.8 billion, with GAAP gross margin in the 76–77% zone. On a full-year basis, Broadcom generated roughly $49.4 billion of gross profit and expanded gross margin to around 77.3%, roughly two percentage points higher than the previous year, which signals genuine pricing power rather than pure volume. Operating leverage is extreme. Quarterly operating income reached about $7.7 billion, up more than 50% year over year, and Q4 net income nearly doubled to around $8.5 billion. Full-year net income jumped to roughly $23.1 billion, close to a three-fold increase, showing how quickly incremental revenue is dropping through to the bottom line. Management guided Q1 FY26 revenue to roughly $19.1 billion with an adjusted EBITDA margin around 67%, a combination that still supports high-teens to 20% plus earnings growth despite the recent pullback in the share price of NASDAQ:AVGO.

AI Semiconductor Engine And Hyperscaler Demand For NASDAQ:AVGO

The core growth driver for Broadcom is now AI semiconductors, not legacy networking or storage. In the most recent quarter, AI semiconductor revenue rose around 74% versus the prior year, a rate that materially outpaces the rest of the portfolio. For Q1 FY26, management expects about $8.2 billion in AI semiconductor revenue alone. At the gross margin profile Broadcom reported in Q4, close to 78% on the AI side, that $8.2 billion translates into roughly $6.4 billion in gross profit from AI in a single quarter. After factoring in R&D and operating costs that typically run near 50% of revenue, that AI segment can realistically generate around $4.0 billion or more in operating income per quarter, above $16 billion on an annualized basis if the run-rate holds. The demand side is anchored in custom XPUs and accelerators designed for very specific hyperscaler workloads rather than generic mass-market GPUs. Broadcom now counts at least five major custom silicon clients, including hyperscalers such as Alphabet, Meta, Amazon, Microsoft and frontier-model customers like Anthropic and OpenAI. These customers are pushing AI workloads that require power, bandwidth and latency characteristics not easily met by off-the-shelf GPUs, which is why Broadcom’s XPU model has traction. The key is that this AI revenue is not speculative. It is tied to committed, contracted orders sitting in a visible backlog that stretches into 2026. That is what differentiates NASDAQ:AVGO from many “AI narrative” names that still depend on future demand assumptions.

Infrastructure Software And VMware As A Cash Machine

Alongside AI hardware, Broadcom’s infrastructure software arm, built around VMware, operates as a stabilizing cash machine. In fiscal 2025, software revenue climbed about 26% to roughly $27 billion, with gross margins sitting near 93% and operating margins reaching around 78%. Those are best-in-class numbers even within the pure software universe and create an earnings floor when semiconductor cycles inevitably soften. The strategic move was the rapid shift of VMware’s largest ten thousand customers from one-time perpetual licenses to subscription contracts. More than 90% of those accounts have already migrated to subscriptions, turning lumpy license revenue into recurring, predictable cash flows. The second phase, now underway, is about pushing these same enterprises onto the VCF 9.0 platform, deepening lock-in and cross-sell potential. If this infrastructure software portfolio scales to roughly $30 billion in annual revenue by 2027 while maintaining gross margin around 93% and operating margin near 80%, it can generate approximately $24 billion in operating income per year by itself. That effectively gives Broadcom a software-like profit layer sitting on top of the AI semiconductor growth engine, a combination that justifies structural valuation premiums for NASDAQ:AVGO compared with commodity chip names.

The $73 Billion AI Backlog And Revenue Visibility

The most important data point in the AI story is Broadcom’s contracted backlog. The company reports more than $73 billion of AI-related orders, to be delivered over roughly the next 18 months. To put that in perspective, the AI backlog is slightly larger than Broadcom’s entire fiscal 2025 revenue base of around $64 billion. Total corporate backlog stands near $162 billion, so AI already represents almost half of the future book. This backlog is not concentrated in a single product; it is distributed across XPUs, high-performance networking silicon, optics, DSPs, lasers and PCIe switches. Products like the Tomahawk 6 switch, capable of 102 terabits per second of bandwidth, are critical to stitching large clusters of AI accelerators together, so Broadcom is embedded in the structural fabric of AI data centers rather than at the edge. Client concentration exists, but it is trending lower as the number of large custom silicon customers increases from three to five and potentially beyond. Orders include a $10 billion XPU deal with Anthropic in Q3 FY25, an additional $11 billion follow-on in Q4, and another initial $1 billion order from a new XPU customer for late 2026 delivery. Management’s guidance for about 100% year-over-year growth in AI revenue into FY26 is therefore backed by concrete delivery schedules, not aspirational pipeline estimates. That level of revenue visibility through at least six quarters is rare in semiconductors and supports the thesis that Broadcom’s AI growth is execution risk, not demand risk.

System Sales, Mix Shift And Gross Margin Optics

The main element the market is punishing in NASDAQ:AVGO is not a demand slowdown but a margin mix shift. Broadcom’s AI deals increasingly take the form of full system sales rather than standalone silicon shipments. For hyperscalers such as Anthropic, Broadcom delivers complete racks that incorporate its own XPUs alongside high bandwidth memory and other third-party components that carry significantly lower margins and are largely pass-through cost. Under this model, the percentage gross margin compresses even as gross profit dollars expand. Management has been explicit about the impact, guiding to around a one percentage point sequential decline in gross margin into Q1 FY26, primarily due to the higher share of AI systems in the mix. That pressure is likely to be persistent while AI continues to scale, as the greater presence of pass-through content mathematically drags down the consolidated margin percentage. However, the operating line tells a different story. Because AI revenue is growing so quickly and the high-value XPU and networking content still carries strong margin, operating income and free cash flow dollars continue to grow robustly even with the headline gross margin percentage drifting lower. The recent multiple compression in AVGO is therefore primarily a reaction to optics at the percentage level rather than a deterioration in economic value.

Non-AI Semiconductor Base And Enterprise Spending

Broadcom’s legacy semiconductor portfolio, outside AI, is no longer a growth driver but remains a large and relevant base. In Q4 FY25, non-AI semiconductor revenue was around $4.6 billion, and guidance for Q1 FY26 is about $4.1 billion, essentially flat year over year. This reflects a broader reality: enterprise IT budgets are being redirected aggressively towards AI infrastructure and away from traditional networking, storage and classic server refresh. That shift makes Broadcom more dependent on the success and durability of AI demand for incremental growth. At the same time, the non-AI semiconductor business continues to provide scale, fixed-cost absorption and a baseline of revenue that smooths quarter-to-quarter volatility. The key risk is not that non-AI semis collapse but that they stagnate, which increases the importance of flawless execution in AI and software to keep the overall NASDAQ:AVGO growth story intact.

Cash Generation, Balance Sheet And Capital Returns For NASDAQ:AVGO

Broadcom generates cash at a rate that allows it to carry elevated leverage while still rewarding shareholders aggressively. Cash and equivalents sit around $16.2 billion, with total assets near $171 billion against total liabilities of roughly $90 billion. Debt is approximately $65 billion, largely due to the VMware acquisition, and would be problematic in a weak cash flow environment. Here, the opposite is true. Trailing twelve-month free cash flow is around $27 billion, up about 39% year over year, implying an FCF margin north of 42%. That level of internal funding comfortably covers interest costs, maturities, R&D, capital expenditures and ongoing M&A optionality. It also leaves substantial room for shareholder returns. In fiscal 2025, Broadcom returned roughly $17.5 billion to investors, split between about $11.1 billion in dividends and $6.4 billion in buybacks. The quarterly dividend was raised to $0.65 per share in Q4, a 10% sequential increase and the fifteenth consecutive annual step-up since dividends began in 2011. The repurchase program still has about $7.5 billion authorised through the end of 2026, providing a mechanism to support NASDAQ:AVGO on sizeable dislocations. For investors tracking management alignment and confidence, monitoring insider behaviour via profiles and transaction data on AVGO adds an additional governance layer on top of these capital allocation decisions.

Valuation, PEG And Margin Quality Moat Of NASDAQ:AVGO

The core question is whether the current valuation of NASDAQ:AVGO is justified by its growth, margins and backlog. Around the $350–355 share price zone, Broadcom trades at roughly 44–45 times forward GAAP earnings, approximately 38% above a sector median near 32 times. Forward EV to EBITDA is below NVIDIA’s but still notably higher than that of Supermicro, Dell or Hewlett Packard Enterprise. On a growth-adjusted basis, however, Broadcom’s forward PEG ratio sits below one in many models, reflecting expectations for around 30% plus earnings growth and roughly 60% plus AI-driven revenue growth in the nearer term. The margin profile is what underpins that premium. Non-GAAP gross margin hovers around 78%. Semiconductor gross margin, even after a 120 basis point year-over-year decline, remains around 68%. Infrastructure software carries gross margin near 93% and EBITDA margin above 60%. Each incremental dollar of revenue is converted into free cash flow at a rate that most hardware peers cannot approach. In practical terms, every $10 billion of incremental AI revenue at current margin levels adds materially to earnings power and supports both deleveraging and higher capital returns. As long as AI backlog converts as planned, software continues to compound at high margins and management maintains cost discipline, a structurally higher multiple for NASDAQ:AVGO compared with conventional semiconductor names is defensible.

Competitive Landscape, Customer Concentration And Structural Risks

The bullish case for NASDAQ:AVGO is not risk-free. The first risk is valuation and expectations. At roughly 44 times forward earnings, Broadcom must continue to execute close to perfectly. Any delay in AI backlog conversion, sharper-than-guided margin erosion, or slowdown in AI orders would trigger further multiple compression. The second risk is competition in AI and custom silicon. NVIDIA still dominates with its GPU plus CUDA software ecosystem. Advanced Micro Devices is pushing its Instinct MI400 series into 2026 with its own hyperscaler partnerships. System vendors and well-funded startups are exploring alternative architectures, including wafer-scale engines, neuromorphic designs and optical computing. On top of that, hyperscalers are building more in-house silicon such as Alphabet’s TPUs, Amazon’s Trainium, and Meta’s MTIA, which could reduce their dependence on external suppliers over time. The third risk is customer concentration. A large share of the $73 billion AI backlog is tied to a small group of five major customers. If even one of these decides to delay deployment or reduce its commitment, quarterly revenue and earnings could be hit hard. The final risk is leverage. With about $65 billion in debt, Broadcom is more leveraged than many mega-cap tech peers. That leverage is manageable while free cash flow runs near $27 billion annually, but any prolonged slowdown in AI spending combined with flat non-AI segments would refocus market attention on balance sheet risk. These factors do not break the investment case, but they constrain the margin for error.

Technical Picture For NASDAQ:AVGO After The Post-Earnings Pullback

From a technical perspective, NASDAQ:AVGO has shifted from a momentum blow-off to a controlled reset. The stock sold off roughly 13% from its early December high around $414 down toward the low $320s after earnings, then attempted to stabilize in the mid $340–350 zone. On longer-term regression channels, that pullback effectively moved the price from an extended plus two standard deviation band back toward the midline, unwinding excess froth without breaking the broader uptrend. Key levels flagged in technical work are the December 17 low near $321.42 as an initial support and the 200-day exponential moving average around $301–302 as the deeper line in the sand. A convincing break below the 200-day EMA would signal a regime change and open the door to a more serious derating. On the upside, the $357–360 area marks both the 38.2% retracement of the $414.60 to $321.42 decline and an important moving average cluster on shorter time frames. A sustained move above that band would suggest that the earnings-driven correction has largely run its course and that the market is willing to refocus on backlog, cash flow and growth rather than on one-point moves in gross margin.

Buy, Sell Or Hold – Investment View On NASDAQ:AVGO In 2026

The data converge on a clear conclusion. Broadcom generated around $64 billion of revenue in fiscal 2025, growing about 24% year over year, with net income near $23.1 billion and gross margin above 77%. AI semiconductor revenue is growing around 74% and guided to $8.2 billion for Q1 FY26, with a contracted AI backlog above $73 billion to be delivered over roughly 18 months. Infrastructure software built on VMware adds about $27 billion in high-margin revenue, with a path toward $30 billion and operating margins near 80%. Free cash flow runs around $27 billion annually, supporting roughly $17.5 billion of annual capital returns and a still-active $7.5 billion buyback authorisation. The risks are concentrated in margin mix dilution from system sales, high customer concentration in five hyperscalers and frontier AI players, elevated leverage and a premium valuation that leaves little room for serious execution errors. Even after those caveats, the combination of visible AI revenue, software-like margins, exceptional free cash flow and the recent 13% post-earnings reset supports a firm stance that NASDAQ:AVGO is a Buy at current levels rather than a name to sell into weakness.

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