Broadcom's Record Earnings Despite Shortcomings Leads to Stock Decline

Broadcom's Financial Quarter Results and Investor Reactions

Broadcom (AVGO) announced its fourth quarter earnings for the fiscal year 2025, and despite its strong performance, it did not meet investor expectations. The company reported that its revenue reached a record level of $64 billion, an increase of 24% year-on-year. This growth was significantly driven by artificial intelligence semiconductors and contributions from VM ware.

Growth from Artificial Intelligence Semiconductors

Revenue from artificial intelligence increased by 65% to $20 billion, while total semiconductor revenues reached $37 billion for the year. Additionally, due to the strong adoption of VMware Cloud Foundation in the infrastructure software segment, revenue grew by 26% to $27 billion.

Financial Performance and Orders

The company increased its adjusted EBITDA by 34%, reaching $12.2 billion in the fourth quarter. Semiconductor revenues amounted to $11.1 billion, and revenue from artificial intelligence semiconductors showed a 74% increase, reaching $6.5 billion. Furthermore, the acquisition of an additional $11 billion in new orders from Anthropic and a $1 billion order from the fifth XPU customer were other notable details that caught the interest of investors.

Future Expectations

The company expects consolidated revenue of approximately $19.1 billion for the first quarter of the fiscal year 2026, with an anticipated annual growth of 28%. Revenue from artificial intelligence semiconductors is expected to reach approximately $8.2 billion, nearly a 100% increase. Additionally, infrastructure software revenue is forecasted to be around $6.8 billion, while semiconductor revenues are expected to reach approximately $12.3 billion.

Finally, the company announced it would increase its dividend per share by 10% to $0.65. However, despite all these positive metrics, the stock experienced a decline and responded below market expectations.