NEW YORK, Dec. 28, 2025, 4:36 p.m. ET — Broadcom Inc. (NASDAQ: AVGO) is navigating a pivotal moment as Wall Street deliberates the implications of surging demand for artificial intelligence (AI) infrastructure against potential margin pressures stemming from an evolving revenue mix. As U.S. equity markets remain closed for the weekend, investors are positioning themselves for Monday’s trading amid thin year-end liquidity and a packed macroeconomic calendar, while high-multiple AI stocks continue to attract scrutiny.
Broadcom shares concluded regular trading on Friday at $352.13, marking a modest increase of 0.55%. In after-hours trading, the stock was quoted at approximately $351.22. This slight uptick reflects broader market sentiments, with major indexes hovering near record levels. However, investors are increasingly quick to adjust their positions on leading AI companies when expectations change. The S&P 500, which is about 1% away from hitting the significant 7,000 mark, is on track for a long monthly winning streak, though light trading volumes during the holiday season may exacerbate market volatility.
Broadcom’s bullish outlook is underpinned by its status as a key supplier for the burgeoning AI sector, specializing in custom AI accelerators (ASICs) and Ethernet AI switches, alongside a substantial infrastructure software offering. In its fiscal fourth quarter results, the company reported a revenue of $18.015 billion, a 28% increase year-over-year. Non-GAAP earnings per share (EPS) stood at $1.95, with GAAP diluted EPS at $1.74. Additionally, Broadcom announced an adjusted EBITDA of $12.218 billion, representing 68% of its revenue, and free cash flow of $7.466 billion for the quarter. Looking ahead, the company projects a revenue of about $19.1 billion for the first quarter of fiscal 2026, again up 28% year-over-year.
CEO Hock Tan emphasized the momentum in AI, noting that revenue from AI semiconductors surged 74% year-over-year in Q4 and is anticipated to double to $8.2 billion in the upcoming fiscal quarter. However, there is a counter-narrative among skeptics who focus on profitability concerns. CFO Kirsten Spears hinted at a potential decrease of about 100 basis points in the company’s first-quarter consolidated gross margin, largely due to a greater proportion of revenue coming from AI products.
Concerns regarding customer concentration and the rising share of lower-margin “systems” revenue were echoed by analysts, including Kinngai Chan of Summit Insights. As investor sentiment shifts, the dynamics of Broadcom’s revenue mix versus profitability will become increasingly critical.
Over the weekend, analyst recap pieces dominated discussions, with updated price targets and ratings reflecting varied market sentiments. According to MarketBeat, Broadcom has a “Buy” consensus based on 33 analyst ratings, with an average 12-month price target of $436.33, representing a potential upside of 24% from its last trading price. Targets vary widely, from a low of $300 to a high of $510, illustrating the polarized views on mega-cap AI infrastructure stocks, where slight adjustments in margin assumptions can lead to significant changes in valuation.
Several analysts have also adjusted their targets as the year draws to a close. Analyst William Stein of Truist Financial raised his target from $500 to $510, while Timothy Arcuri at UBS Group increased his target from $472 to $475. Ross Seymore of Deutsche Bank set his target at $430, all maintaining “Buy” ratings. Other notable adjustments include Stacy Rasgon from Sanford C. Bernstein, who reiterated “Outperform” with a target hike from $400 to $475, and Harlan Sur from JPMorgan, who also boosted his “Overweight” rating from $400 to $475.
As Broadcom continues to attract attention for its robust cash generation and dividend growth—CEO Spears recently highlighted fiscal 2025 adjusted EBITDA of $43.004 billion and free cash flow of $26.914 billion—the company announced a 10% increase in its quarterly dividend to $0.65 per share. This dividend growth is particularly appealing for income-focused investors looking to engage with the AI sector.
As trading resumes on Monday, several factors may impact Broadcom’s stock movement. The thin holiday volumes could exacerbate price fluctuations, especially in tech stocks where investor positions may be crowded. Additionally, upcoming macroeconomic data, including pending home sales and S&P Case-Shiller home price index releases, could influence market dynamics. Investors will be observing closely whether Broadcom can sustain its AI growth trajectory while managing profitability amid a shifting revenue mix.
Broadcom enters Monday’s session with a compelling case for its growth prospects in AI, alongside a strong cash flow narrative. However, the delicate balance of sustaining growth while addressing margin pressures will be crucial for investor confidence as market dynamics evolve.
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