To The Moon

With AI bubble, tech stocks seling, we have seen that $Broadcom(AVGO)$ suffer a decline on 03 Dec 2025, before rising again to close last week around $390. So will we be seeing Broadcom providing a beat on the AI momentum?

In this article, we would examine this would come into play with the Broadcom (AVGO) upcoming fiscal Q4 2025 earning with a comprehensive pre-earnings analysis of Broadcom (AVGO) as it heads into its fiscal Q4 2025 earnings (expected after market close on ~Dec 12, 2025) — focusing on AI momentum, key metrics, consensus expectations, and potential short-term trading opportunities.

What Wall Street Is Expecting for Q4 2025

Consensus estimates (prior to earnings):

• Revenue: ~$17.0–17.4 billion, ~24% YoY growth.

• Adjusted EPS: ~$1.87/share.

• AI Semiconductor Revenue: ~$6.2 billion, up ~66% YoY.

• Infrastructure Software Revenue: ~$6.7 billion (VMware & related).

Broadcom’s own guidance sits at the high end of these ranges.

Why this matters: Regions of Strong Growth (AI chips + software) are driving most of the upside — while non-AI semiconductor segments remain weaker. TipRanks

Why AI Momentum Is Central to This Quarter

Broadcom’s AI business has been the strongest growth driver:

Record catalogue of AI deals & backlog:

• Backlog now ~$110 billion, with meaningful AI bookings.

AI semiconductor yoy growth: YoY AI chip revenue up ~63% in Q3, expected to accelerate further.

Major customer wins & partnerships:

• Key hyperscalers like $Alphabet(GOOGL)$ Google (Broadcom-designed chips for Gemini) and others driving demand.

• Broadcom is also reportedly partnering with OpenAI on AI silicon.

Takeaway: AI still works as long as revenue growth stays high — the next step is whether guidance can prove momentum extending into fiscal 2026.

Q3 2025 Earnings Summary — Broadcom (AVGO)

1. Top-Line & Income Results

• Record revenue: $15.95 billion, up ~22% year-over-year, beating expectations.

• Adjusted EBITDA: $10.70 billion (≈67% of revenue), up ~30% YoY.

• Non-GAAP EPS: $1.69 — ~36% growth from prior year and above street estimates.

• GAAP net income: $4.14 billion vs. a prior loss the year before, largely due to non-recurring items.

• Free Cash Flow: A record $7.0 billion (≈44% of revenue), up ~47% YoY.

2. Segment Highlights

• AI Semiconductor Revenue: Grew 63% YoY to $5.2 billion, driving the largest share of growth and marking ~10-11 consecutive quarters of strong AI expansion.

• Semiconductor Solutions (total): ~$9.17 billion — up ~26% YoY.

• Infrastructure Software (incl. VMware): ~$6.8 billion, up ~17% YoY — showing solid subscription and enterprise demand.

3. Guidance for Q4 2025

• Revenue forecast: ~$17.4 billion (≈24% YoY growth), topping consensus expectations.

• Adjusted EBITDA: Expected to remain ~67% of revenue.

• AI Semiconductor projection: ~$6.2 billion, suggesting continued acceleration in AI demand.

Key Lessons from the Guidance

1. AI Remains the Primary Growth Engine

The most striking takeaway from Q3 was the continued strong surge in AI revenue, with custom AI accelerator/semiconductor sales growing at more than double digits. Management’s guidance for Q4 anticipates further acceleration, underscoring that AI demand is not only intact — it’s expanding into new customers and deployments. This positions Broadcom as a key beneficiary of data-center and hyperscale AI buildouts.

Lesson: AI-centric hardware (XPUs/custom chips) and networking silicon are now central to Broadcom’s growth thesis, and future earnings will hinge significantly on maintaining this momentum.

2. Diversified Earnings with Recurring Software

Infrastructure software, especially VMware subscription revenue, showed resilient growth and continues to contribute a predictable, high-margin revenue layer. This helps balance cyclical semiconductor demand and supports broader margin strength.

Lesson: Dual engines — hardware + software — provide revenue stability and expand total addressable market beyond pure silicon alone.

3. Robust Cash Flow & Capital Allocation

Broadcom delivered exceptional free cash flow and returned significant capital to shareholders via dividends. This strong cash conversion gives management flexibility for strategic investments, debt management, or shareholder returns even if macro conditions shift.

Lesson: Operational cash strength is a competitive advantage, supporting both innovation and shareholder returns.

4. Customer Concentration & Macro Cyclicality

While AI growth is robust, Broadcom’s revenue remains tied to a relatively small number of large hyperscale customers. That creates concentration risk where any slowdown in hyperscale capex could materially impact results. Additionally, non-AI semiconductor segments showed slower activity sequentially.

Lesson: Growth is not uniform across segments. Investors should watch cyclical demand and customer capex patterns as potential volatility drivers.

5. Guidance Reflects Confidence but High Expectations

The above-consensus revenue forecast and sustained high EBITDA margin indicate management confidence in continued demand. Yet, given already high growth rates in AI, the bar for future quarters is elevated — meaning future guidance and execution will be scrutinized closely for signs of deceleration.

Lesson: Execution on guidance — not just the current beat — will increasingly define investor sentiment.

Broadcom’s Q3-2025 earnings delivered a strong beat with broad AI momentum and record cash flow, echoing its strategic transition into AI-centric infrastructure and recurring software. The guidance reinforces that trajectory but also highlights that future investor returns depend on sustaining this high-growth cadence, diversifying dependency beyond a handful of customers, and balancing cyclicality in non-AI segments.

Key Earnings Metrics Investors Should Watch

Here are the most critical metrics for Q4:

Revenue & AI Segment Growth

• Total revenue vs. expectations (~17.0–17.4 B).

• AI semiconductor revenue growth % yoy — starring metric for AI momentum.

Profitability & Margins

• Adjusted EBITDA margin (guidance ~67%).

• Gross margin trajectory — Broadcom has signaled some pressure due to AI/XPU product mix.

Segment Breakdown

Growth rates in:

• AI semiconductors

• Networking chips

• Infrastructure software (VMware)

Backlog & Bookings

• Backlog strength gives visibility into future quarters.

Guidance

• FY2026 revenue/margins guidance will be more important than just Q4 results — especially if AI chip growth outpaces the overall semiconductor market.

Risks & Why Blended AI Sentiment Matters

Key risk factors to watch:

• Non-AI semiconductor weakness: Slower growth or declines in traditional chips could drag overall numbers.

• Margin pressure: A mix shift into lower-margin hardware or expenses could compress margins.

• Valuation risk: Broadcom trades at lofty multiples, meaning even slight misses can lead to sharp short-term corrections.

• Market sentiment & AI bubble talk: If broader markets rotate out of AI names, Broadcom’s multiple could come under pressure even if fundamentals are solid. (industry context)

On the positive side, recent analyst price target raises and “strong buy” sentiment reflect confidence in Broadcom’s AI roadmap.

Broadcom (AVGO) Price Target

Based on 40 analysts from Tiger Brokers app offering 12 month price targets for Broadcom in the last 3 months. The average price target is $403.24 with a high forecast of $535.00 and a low forecast of $218.00. The average price target represents a 3.33% change from the last price of $390.24.

Short-Term Trading & Post-Earnings Scenarios

Here are some potential short-term trading opportunities around the Q4 results:

Bullish scenarios

• Revenue/EPS beat + strong AI guidance: Could trigger a breakout continuation — similar to post-Nvidia beats.

• Better-than-expected AI growth or raised FY26 view could fuel a strong gap higher.

Bearish / volatility scenarios

• In-line results but weak guidance: Stocks can sell off even on slightly good numbers (valuation expectations high).

• As noted by some options pricing, the market is currently pricing in a big post-earnings move (~31 points) — suggesting elevated implied volatility.

Common short-term setups investors use:

• Straddle/strangle around earnings to play expected volatility.

• Bullish call spreads if confident in AI strength.

• Protective puts if expecting mean reversion in chip stocks.

Important: trading earnings is inherently high-risk due to gaps and volatility.

I personally might go for Bull Call Spread while continuing to hold my existing AVGO position.

Bottom Line — Is a Beat Likely?

Bullish Points:

• Strong AI demand remains a key driver.

• Strong backlog and hyperscale customers ahead.

• Analysts have raised estimates and price targets.

Risks to Beat:

• High expectations already priced in — even quality beats may disappoint relative to valuation.

• Margin pressures and mix impacts.

• Macro rotation away from AI/high multiples could weigh. (broader context)

Broadcom is well positioned to report strong fundamentals in Q4, with AI being the star growth story. However, the bar is high, and the market might react more to guidance than just a headline beat.

In the next section I would like to share a clean, easy-to-follow post-earnings trade-idea flowchart for Broadcom (AVGO) that I have created based on risk preference and earnings outcome. I am using this to assist me in my trading plan for broadcom, as I am holding a position on Broadcom currently.

Broadcom (AVGO) – Post-Earnings Trading Flowchart

(Based on Risk Preference: Conservative | Moderate | Aggressive)

STEP 1 — Identify the Earnings Outcome

Did Broadcom beat expectations AND raise FY2026 AI guidance?

YES: Strong Beat + Bullish Guidance

• AI revenue > estimates, strong hyperscaler commentary

• Margins in line or better

• FY26 AI or backlog outlook raised

→ Go to STEP 2A

MIXED: Beat but Guidance Soft

• Earnings good, but FY26 outlook cautious

• Margin pressure or slowing non-AI chips

• Market reaction uncertain

→ Go to STEP 2B

NO: Miss or Negative Guidance

• AI growth slows

• Backlog weaker

• Margins compress

• Lower FY26 view

→ Go to STEP 2C

STEP 2A — Strong Beat & Strong Guidance

Market likely gaps up or trends up next few sessions

Conservative

• Buy small on pullbacks to 5–8% intraday dips

• Use tight stop-loss under post-earnings low

• Hold for 2–6 weeks momentum continuation

Moderate

• Call spread (1–2 month expiration)

• Or cash-secured puts at support levels (collect premium while targeting entry)

Aggressive

• Short-dated calls (1–2 weeks) to capture upside extension

• Momentum breakout trade if AVGO clears post-earnings high

STEP 2B — Mixed Results (Beat but Soft Guidance)

Choppy reaction, possibly sell-the-news

Conservative

• Wait 48–72 hours for market to digest

• Only enter if AVGO stabilizes above 20-day moving average

Moderate

• Iron condor or straddle fade (volatility crush play)

• Sell puts only if price holds key support (typically pre-earnings base)

Aggressive

• Short AVGO for 1–3 days if immediate rejection at resistance

• Quick put options targeting 3–7% pullback window

STEP 2C — Earnings Miss or Weak Guidance

AI slowdown, margin compression, lower FY26 tone

Conservative

• Do nothing; wait 1–2 weeks for a new technical base

• Only re-enter once selling volume declines

Moderate

• Sell out-of-the-money puts once implied volatility spikes

• Target long-term levels (200-day MA or major support zones)

Aggressive

• Short or buy puts immediately on breakdown

• Aim for 5–10% downside move within 3–10 days

BONUS — Quick Decision Map)

Technical Analysis - Exponential Moving Average (EMA)

AVGO have shown a pretty good upside movement after suffering the decline due to the fear of an AI bubble, and now we are seeing AVGO trading pretty nicely above the short-term EMA, so if AVGO shows an earning beat with a significant benefit from the AI momentum.

We could see AVGO making a nice upside towards the target price above $400, I am holding my position while looking at the price action to see if can play option for short term on the Bull Call spread to take advantage of the bullish sentiment.

Summary

 Broadcom enters its fiscal Q4 2025 earnings with extremely high expectations, driven by ongoing strength in AI semiconductors and steady performance in software (VMware). Wall Street is looking for ~$17.0–17.4B in revenue (~24% YoY growth) and continued margin resilience with adjusted EBITDA near 67%. Analysts expect AI semiconductor revenue to reach ~$6.2B, accelerating from Q3 and reflecting hyperscaler demand for custom accelerators, networking silicon, and next-gen PCIe/optical interconnect products.

AI remains the largest and fastest-growing segment, supported by major customers such as Google (Gemini), Meta, and cloud providers building internal silicon. Broadcom’s expanding backlog — now above $100B — gives visibility into multi-quarter AI deployments. On the software side, VMware subscription growth remains stable and high-margin, helping offset cyclical softness in non-AI semiconductors.

The key metrics to watch include: • AI semiconductor growth (absolute and YoY) • Infrastructure software revenue trajectory • Gross/EBITDA margins (any mix-shift pressure) • Backlog and bookings updates • FY2026 revenue and AI guidance

The main risk is not Broadcom’s fundamentals but the bar of expectations: valuation is elevated, AI sentiment is sensitive, and even a slight slowdown in guidance could trigger pullbacks. Non-AI semiconductor demand is also moderating, which may weigh on segment mix.

In the short term, AVGO typically reacts strongly to earnings due to high implied volatility. A beat with strong AI guidance could trigger a breakout, while flat or cautious FY2026 comments could lead to a “sell the news” setup.

Broadcom is positioned for another solid quarter with AI as the dominant growth engine, but the stock’s reaction will depend more on forward guidance and sustainability of AI acceleration than the headline numbers.

Appreciate if you could share your thoughts in the comment section whether you think Broadcom would provide an earning beat with AI momentum as catalyst.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.