Broadcom (AVGO.US) is set to report its fiscal Q4 2025 earnings after the market closes on December 11 (ET). Wall Street anticipates revenue to rise 24.5% year-over-year (YoY) to $17.5 billion, with adjusted EPS growing 31% YoY to $1.87. As a key player in the "Alphabet (GOOGL.US) ecosystem," Broadcom stands to benefit from Alphabet’s expanded Tensor Processing Unit (TPU) sales to external clients and robust AI spending, positioning it for another potential earnings surprise.
Like Nvidia, Broadcom is seen as a prime beneficiary of surging AI investments, with data centers relying on its custom chips and networking components to handle AI workloads. As one of the largest suppliers of high-performance application-specific integrated circuits (ASICs) to hyperscalers, Broadcom has delivered strong performance this year, with shares up nearly 70% year-to-date and over 18% in Q4 alone.
Beyond its solid fundamentals, Broadcom’s central role in Alphabet’s AI strategy makes it a derivative play on Alphabet’s growing dominance in AI. The synergy lies in ASICs—Alphabet is a major client for Broadcom’s ASIC business, which co-designs and manufactures Alphabet’s TPUs. These custom AI chips power Alphabet’s internal infrastructure, including training Gemini 3, its cutting-edge multimodal and reasoning model. While most AI workloads still rely on Nvidia GPUs, industry interest in TPUs is rising, evidenced by reports that Meta (META.US) may spend billions on TPUs starting in 2027 and Anthropic’s commitment to use up to 1 million TPUs from 2026.
DA Davidson’s Gil Luria notes, "Alphabet’s TPUs offer a viable alternative to Nvidia, underscoring optimism. Even if Alphabet never sells chips directly, better chips mean superior cloud services." He estimates TPUs could capture 20% of the AI chip market, potentially generating $900 billion in value.
Broadcom’s partnerships extend beyond Alphabet, including deals with OpenAI and Meta. In August, Meta tapped Broadcom for custom ASICs, while OpenAI signed a long-term agreement in October to co-develop 10-gigawatt AI accelerators. Reports also suggest Microsoft is in talks with Broadcom for future custom chips.
Citi projects Broadcom’s AI revenue will surge 147% YoY to $49.3 billion in fiscal 2026, accounting for 53% of total revenue (up from 31% in fiscal 2025). It expects Q1 2026 revenue guidance of $18 billion (vs. consensus of $18.4 billion), with gross margins holding at 76%. Goldman Sachs forecasts fiscal 2026 AI revenue at $45.4 billion (+128% YoY), rising to $77.3 billion in fiscal 2027, highlighting Gemini 3’s impact and Broadcom’s Tomahawk 6 chip scaling.
Ahead of earnings, bullish calls abound. Citi reiterates a "Buy" rating with a $415 target (30x fiscal 2027 EPS), while Goldman raises its target to $435, citing underestimated AI revenue potential. Jefferies’ Blayne Curtis names Broadcom a top pick, noting ASIC demand is at an "inflection point" as Alphabet’s monthly token processing hits 1.3 quadrillion (up from 480 trillion in April 2025). Curtis lifts his target to $480.
Wedbush’s Dan Ives, who holds both stocks in his AI-focused ETF, calls Broadcom and Alphabet "re-emerging AI plays," praising TPUs as "the most battle-tested ASICs." Melius Research’s Ben Reitzes raises his target to $475, stating, "Broadcom’s AI upside is massive, with TPUs becoming pivotal to Alphabet’s growth."
Broadcom’s earnings could serve as a bellwether for sustained AI capex in 2026, potentially bolstering market confidence amid debates over AI valuations.
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