Company Overview
Broadcom reports its fiscal Q4 2025 earnings tomorrow after market close (December 11th), and the semiconductor industry’s eyes are firmly focused on what could be the most significant AI infrastructure earnings report of the quarter. The company enters this print with tremendous momentum: shares have surged 55% year-to-date to around $400, just below the recent all-time high of $403, as Wall Street’s conviction around Broadcom’s custom AI chip dominance intensifies.
UBS just raised its price target to $472 from $415, calling Broadcom a “top AI play” and highlighting its deepening partnerships with Google on custom ASICs. The setup is compelling but high-stakes: analysts expect Q4 revenue of $17.4 billion (up 24% year-over-year) with AI semiconductor revenue projected to surge 66% to $6.2 billion. The company has never traded at its current forward P/E of 45x heading into an earnings release, suggesting the market’s actual expectations may be substantially higher than published estimates. This creates both opportunity and risk as Broadcom attempts to justify a valuation that prices in continued AI infrastructure dominance.
Key Technical and Fundamental Drivers
Tomorrow’s Earnings → 66% AI Growth Expected Analysts project Q4 AI semiconductor revenue of $6.2 billion (up 66% YoY) within total revenue of $17.4 billion, with the earnings call at 5:00 PM ET tomorrow providing critical insights into 2026 guidance.
Fresh UBS Upgrade → $472 Price Target UBS raised its target from $415 to $472 in recent days, citing Broadcom’s AI silicon leadership and partnerships with Google that support surging demand for custom application-specific integrated circuits (ASICs).
$110 Billion AI Backlog → Multi-Year Visibility Management has disclosed a $110+ billion backlog heavily weighted to AI infrastructure, providing unprecedented revenue visibility and underscoring hyperscaler commitment to custom chip designs.
Mystery Customer Momentum → $10B OpenAI Deal Last quarter’s announcement of a fourth customer representing $10 billion in orders (widely believed to be OpenAI) demonstrates Broadcom’s ability to win massive design wins beyond its core Google, Meta, and Microsoft relationships.
VMware Integration → Software Diversification Infrastructure software revenue (primarily VMware Cloud Foundation) is expected to grow 15% to $6.7 billion in Q4, providing high-margin recurring revenue diversification beyond semiconductors.
Market Takeaway
Broadcom represents the most concentrated bet on custom AI chips in the semiconductor space, holding an estimated 75% market share in custom ASICs for hyperscale customers. While Nvidia dominates general-purpose GPU sales, Broadcom wins when tech giants like Google, Meta, Microsoft, and OpenAI need application-specific silicon optimized for their particular workloads. The Q3 revelation of a $10 billion order from a fourth customer expanded the narrative beyond just Google TPUs to a broader hyperscaler adoption story.
Tomorrow’s earnings will be critical for several reasons. First, can AI semiconductor revenue actually hit that 66% growth target, or has some demand been pulled forward? Second, what does management say about 2026 guidance given CEO Hock Tan’s audacious goal of reaching $120 billion in AI revenue by 2030 (up from about $20 billion in FY2025)? Third, how are non-AI semiconductor segments performing—management has described them as “flat to slowly recovering,” and any acceleration there would provide important diversification. Fourth, is VMware Cloud Foundation gaining traction despite pricing controversies that have frustrated some enterprise customers?
The valuation debate is front and center. At 45x forward earnings, Broadcom trades at a premium to most semiconductor peers, justified by bulls as appropriate for a company with 66% AI revenue growth and a $110 billion backlog. Bears counter that even a modest disappointment could trigger significant multiple compression, especially with analyst price targets now clustered just 3-5% above current levels. Several research firms have explicitly warned that AVGO “could be meaningfully above intrinsic value” at $400 per share.
The pattern is notable: Broadcom shares have consistently rallied following earnings reports during the AI boom, often by high single digits. Last quarter’s 9% pop on the mystery customer news demonstrates how positive surprises get rewarded. However, this quarter sets up differently—expectations are higher, the valuation is richer, and any signs of AI spending moderation among hyperscalers could disappoint. For traders positioning ahead of tomorrow’s 5:00 PM ET report, the binary nature creates opportunity: a strong beat with robust 2026 guidance could push toward those $450-$472 analyst targets, while any whiff of deceleration could see profit-taking from recent all-time highs. The AI infrastructure thesis remains intact, but tomorrow’s execution will determine whether Broadcom can sustain its premium valuation into 2026.