Investors delivered a harsh verdict on Broadcom’s stellar fourth-quarter earnings report, sending the stock plummeting approximately 11% to $359.93 on Friday. This sell-off occurred even as the semiconductor and software giant posted revenue and profit that comfortably exceeded Wall Street forecasts, fueled by exceptional growth in its artificial intelligence division.
Exceeding Expectations, Yet Disappointing the Market
The company’s financial metrics for the quarter were undeniably robust. Revenue surged 28% year-over-year to $18.0 billion. This expansion was primarily driven by the semiconductor solutions segment, where Broadcom is capitalizing on intense demand for AI infrastructure. Revenue attributed to AI products skyrocketed by 74% compared to the prior year, underscoring the company’s strong positioning in custom AI accelerators and networking solutions like Ethernet switches.
On a non-GAAP basis, earnings per share reached $1.95, surpassing analyst consensus. In a further sign of financial strength, Broadcom’s board approved a 10% increase in the quarterly dividend to $0.65 per share.
Looking ahead, CEO Hock Tan provided an outlook for the first quarter of fiscal year 2026, projecting revenue of approximately $19.1 billion, indicating continued sequential growth.
Unpacking the Post-Earnings Decline
The market’s negative reaction appears rooted in elevated expectations. In the lead-up to the report, Broadcom’s share price had experienced significant gains, effectively pricing in a highly optimistic scenario. While the company’s guidance was strong, it did not meet the most aggressive estimates circulating among some Wall Street analysts.
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Another factor contributing to investor caution involves the clarification around the AI backlog. Broadcom confirmed an order backlog of $73 billion, which it now expects to fulfill within a 12-month window—a faster timeline than previously communicated. However, this accelerated schedule has led to some concerns among investors regarding potential production bottlenecks or order irregularities from major customers.
Such post-earnings pullbacks are not uncommon for Broadcom historically. Long-term investors often view these periods of consolidation as potential entry points once the initial market reaction subsides.
Analyst Confidence Remains Firm
In a contrasting move to the stock’s price action, UBS reinforced its bullish stance on Monday. The investment bank raised its price target for Broadcom to $475 and reaffirmed its “Buy” rating. Analyst Timothy Arcuri cited increased confidence following discussions with management, projecting that Broadcom could generate over $60 billion in revenue from AI semiconductors alone in fiscal 2026. Deliveries to partners such as Anthropic are also expected to extend into 2027.
From a technical perspective, the $360 level is viewed as a key area of support. If this level holds, the stock may attempt to recover its recent losses. A sustained break below $350, however, could signal a phase of further consolidation. The market will next await the company’s quarterly results, expected in March 2026.
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