Broadcom Inc. stock reversed sharply lower by approximately 5% in premarket trading on Friday, December 12, 2025, despite the semiconductor giant reporting robust fiscal fourth-quarter 2025 earnings and strong first-quarter 2026 guidance. The decline followed CEO Hock Tan's comments during the earnings call, which investors seemingly misinterpreted or found underwhelming regarding the company's future artificial intelligence (AI) revenue trajectory and gross margins. Shares initially rose after the earnings report but then fell during the live conference call.^{[1][2][3][4][5][6]} ### Strong Results Overshadowed by Investor AI Expectations Broadcom delivered impressive financial results for its fourth quarter of fiscal 2025, which ended October 29. The company reported consolidated revenue of $18.02 billion, a significant 28% increase from the previous year. This figure surpassed Wall Street's consensus estimate of $17.49 billion. Adjusted earnings per share also beat expectations, coming in at $1.95 against a consensus of $1.86 per share.^[3][4][6][7] A major driver of this growth was Broadcom's AI semiconductor revenue, which surged 74% year-over-year in the fourth quarter. Looking ahead, the company provided an optimistic outlook for the first quarter of fiscal 2026, forecasting consolidated revenue of approximately $19.1 billion. This guidance exceeded analyst estimates of $18.5 billion. Broadcom also projected its AI semiconductor revenue to double year-over-year to $8.2 billion in the current quarter, driven by custom AI accelerators and Ethernet AI switches.^{[8][3][4][9][6][7]} Despite these strong numbers, the market reacted negatively to specific remarks made by CEO Hock Tan. Tan disclosed that Broadcom holds a backlog of $73 billion in AI product orders, scheduled for delivery over the next six quarters, or 18 months. While a substantial figure, some investors found this volume less explosive than their high expectations, leading to disappointment. Tan clarified that this $73 billion represented a "minimum" value and that the company anticipates "much more as more orders come in" for shipments within that timeframe.^[1][3][4][5] ### CEO's Cautious Tone and Margin Pressures Further dampening investor sentiment were CEO Hock Tan's cautious remarks regarding the company's future AI revenue. Tan declined to offer specific guidance beyond the first quarter of fiscal 2026, describing fiscal 2026 performance as a "moving target" and stating, "I'd rather not give you guys any guidance." This guarded commentary contrasted with the market's hunger for aggressive growth projections in the rapidly expanding AI sector.^[8][3][4] The timing of revenue from key partnerships also became a point of concern. Tan confirmed that while Broadcom is on a multiyear journey with OpenAI, a significant impact on revenue is not expected until 2027 or 2029. An initial order from OpenAI was noted as $1 billion, slated for delivery in late 2026. This timeline likely fell short of some investors' hopes for more immediate contributions from the high-profile AI developer.^{[8][10][11][6]} Adding to the cautious outlook, Broadcom's Chief Financial Officer, Kirsten Spears, highlighted anticipated gross margin pressures. Spears noted that the consolidated gross margin for the first quarter of fiscal 2026 is expected to decrease by approximately 100 basis points sequentially. This projected decline primarily reflects a higher mix of AI revenue, which generally carries lower gross margins compared to Broadcom's infrastructure software business.^{[1][3][10][5][6]} Conversely, the company expects its operating margin to continue rising.^[10] Moreover, the non-AI semiconductor business is expected to remain stable or flat year-over-year, indicating that AI is currently the sole significant growth engine for the semiconductor segment.^{[8][10][5][6]} ### Market's Heightened Sensitivity to AI Momentum The immediate stock reaction underscores the market's extreme sensitivity to any perceived slowdown or lack of "fireworks" in the AI sector. Broadcom shares initially climbed as much as 4% in after-hours trading following the strong earnings release. However, these gains evaporated once the earnings call began, with the stock ultimately falling approximately 4.5% to 5% by the following morning.^{[1][2][3][4][5][6]} Analysts generally remained positive about Broadcom's overall performance, congratulating management on the results. However, many pressed for additional details on the AI backlog, supply chain, and customer pipeline, reflecting the intense focus on AI's future trajectory. Broadcom has secured significant AI orders, including an $11 billion order from Anthropic in the fourth quarter, following a $10 billion order in the third quarter. These orders are for rack-scale systems, not just custom AI accelerators.^[1][10][11] Despite the stock reversal, Broadcom management maintains a confident tone, emphasizing record revenue growth driven by accelerating demand for AI semiconductors and robust performance in its Infrastructure Software segment. The company continues to project AI as its primary growth engine.^[8] ***

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