Broadcom (AVGO) delivers $18bn quarter—can AI revenue keep smashing Wall Street forecasts?

Broadcom Inc. (NASDAQ: AVGO) has delivered what can only be described as a watershed moment for the global semiconductor and software sector, reporting fourth quarter and full-year 2025 financial results that have set new records for revenue, profitability, and shareholder returns. The Palo Alto-headquartered technology powerhouse revealed that its fiscal fourth quarter revenue soared to $18.0 billion, a 28 percent increase year over year. This milestone was driven in large part by artificial intelligence semiconductor revenue, which climbed a remarkable 74 percent from the previous year’s levels. The strategic focus on custom AI accelerators and Ethernet AI switches appears to be paying off handsomely for Broadcom Inc., which now expects this momentum to accelerate well into 2026.

President and Chief Executive Officer Hock Tan emphasized the pivotal role of AI infrastructure in Broadcom Inc.’s success, noting that the company forecasts AI semiconductor revenue to double to $8.2 billion in the first quarter of fiscal 2026. According to management, this isn’t a passing trend but rather a structural tailwind as hyperscale and enterprise clients continue to ramp up investments in next-generation datacenter hardware. With its market-leading portfolio spanning semiconductors, networking, broadband, wireless, and infrastructure software, Broadcom Inc. is positioning itself as the essential building block for the global AI revolution.

Why analysts are eyeing Broadcom’s Q4 and full-year 2025 financial performance

The details behind the headline numbers reveal just how much operating leverage Broadcom Inc. has achieved. The company reported a GAAP net income of $8.5 billion for the fourth quarter, nearly double the prior year’s figure, while non-GAAP net income reached $9.7 billion. Earnings per diluted share on a GAAP basis rose to $1.74, up 93 percent year over year, and non-GAAP diluted EPS increased 37 percent to $1.95. Adjusted EBITDA climbed to $12.2 billion in the quarter, representing an impressive margin of 68 percent. Free cash flow stood at $7.5 billion, accounting for 41 percent of revenue, and was bolstered by operating cash flow of $7.7 billion against modest capital expenditures of $237 million.

Turning to the full year, Broadcom Inc. achieved $63.9 billion in net revenue for fiscal 2025, a 24 percent increase compared to the previous year. On a GAAP basis, net income surged 292 percent to $23.1 billion, while non-GAAP net income increased 42 percent to $33.7 billion. Annual adjusted EBITDA soared 35 percent to $43.0 billion, with full-year free cash flow up 39 percent to $26.9 billion. The semiconductor solutions business contributed $36.9 billion for the year, up 22 percent, while infrastructure software delivered $27.0 billion, up 26 percent. This broad-based growth highlights Broadcom Inc.’s dual strength in both hardware and software, providing a diversified platform that is highly resilient to sector volatility.

Can Broadcom sustain its earnings momentum as it enters fiscal 2026?

The outlook for the new fiscal year is turning even more ambitious. Management has issued first quarter fiscal 2026 guidance for revenue of approximately $19.1 billion, a further 28 percent increase from the previous year’s comparable period. Adjusted EBITDA is forecasted to hit 67 percent of projected revenue, reinforcing the company’s commitment to best-in-class profitability. Hock Tan has underlined the importance of custom AI accelerators and Ethernet AI switches, which are expected to drive the doubling of AI semiconductor revenue in Q1 2026. The pipeline of wins in cloud, enterprise, and hyperscale segments, combined with the expanding software portfolio following the VMware acquisition, gives Broadcom Inc. an unusually strong forward trajectory.

While the company’s growth prospects look formidable, management has also flagged the typical risks that come with such rapid expansion. These include global macroeconomic uncertainty, ongoing supply chain complexity, regulatory changes, and the operational challenges associated with large-scale integrations. However, Broadcom Inc.’s leadership maintains that disciplined execution and risk management will remain central pillars of its long-term growth strategy.

What does Broadcom’s record dividend hike reveal about capital allocation priorities?

Broadcom Inc. is not just reinvesting for growth but also rewarding its investors in a big way. The Board of Directors has approved a 10 percent increase in the quarterly common stock dividend, lifting it to $0.65 per share. This marks the fifteenth consecutive annual increase since 2011 and sets a record annual dividend payout target of $2.60 per share for fiscal 2026. During the fourth quarter alone, Broadcom Inc. returned nearly $2.8 billion to shareholders through dividends. With cash and cash equivalents reaching $16.2 billion by the end of the quarter, the company has substantial flexibility to fund future investments, pay down debt, and continue robust returns to shareholders.

Management’s commitment to shareholder value is further underlined by its focus on free cash flow generation. The company generated $7.7 billion in operating cash flow during the quarter and kept capital expenditures to just $237 million, resulting in a best-in-class free cash flow conversion ratio. This financial discipline gives Broadcom Inc. an edge in an industry where capital allocation often determines long-term leadership.

How is investor sentiment shifting after Broadcom’s blockbuster results?

The market’s response to Broadcom Inc.’s 2025 performance has been swift and overwhelmingly positive. Analysts covering the technology sector have been quick to recalibrate their models, with many noting Broadcom Inc.’s unique “picks and shovels” position at the heart of the artificial intelligence and cloud infrastructure boom. The company’s stock price has benefited from these upgrades, with five-day and quarterly gains reflecting a surge in institutional accumulation. Buy-side conviction has grown as Broadcom Inc. demonstrates that it can capture both the cyclical upturn in hardware demand and the structural expansion of its software revenue base.

Institutional investors have also taken note of Broadcom Inc.’s strong balance sheet and disciplined capital returns. With $62 billion in annual sales now seen as a new baseline, many view the company as a must-own stock for anyone seeking exposure to the intersection of AI hardware, datacenter infrastructure, and mission-critical enterprise software. The sentiment from portfolio managers is increasingly one of buy-and-hold, with expectations for double-digit top-line growth and sustainable high margins now firmly anchored in consensus forecasts.

What are the key risks and competitive threats Broadcom faces as AI demand accelerates?

Even as Broadcom Inc. enjoys a period of unprecedented success, management has made it clear that vigilance is required. The company’s latest financial report highlights a number of macro and industry-specific risks, ranging from geopolitical instability and trade policy shifts to the operational hurdles of integrating major acquisitions like VMware. The broader semiconductor industry remains cyclical and sensitive to supply chain shocks, while rapid technological evolution requires continuous investment in R&D and product innovation.

Nonetheless, Broadcom Inc. is betting that its scale, customer relationships, and ability to execute will help it navigate these challenges. The long-term opportunity in artificial intelligence chips, software-defined networking, and enterprise cloud platforms remains vast. With an expanding addressable market, a robust innovation pipeline, and the financial muscle to support both organic and inorganic growth, Broadcom Inc. appears better positioned than most to sustain its leadership as AI becomes an even larger share of global technology spending.

Expert sentiment: Is Broadcom the go-to AI infrastructure play for institutional investors in 2026?

From an expert perspective, Broadcom Inc. is increasingly seen as the definitive “must-own” name in AI-driven infrastructure. The results from Q4 and the full year of 2025 have sent a clear signal to the market that Broadcom Inc. is not only growing faster than many of its peers but is doing so with exceptional profitability and capital efficiency. The company’s forward guidance for fiscal 2026 suggests confidence in both the durability of AI demand and its ability to capture incremental value in high-margin segments.

Analysts believe that Broadcom Inc.’s ability to pair leading-edge semiconductor design with a growing software stack is a differentiator that few can match. With recurring revenues from infrastructure software now approaching half of total sales, the company has a built-in hedge against sector volatility and a platform for long-term value creation. As Wall Street recalibrates its forecasts, the prevailing sentiment remains strongly positive. Institutional flows have been predominantly bullish, with the company often cited as a core holding for funds targeting the technology and AI sectors.

The balance sheet strength, recurring revenue streams, and best-in-class capital allocation put Broadcom Inc. in a rare category among global technology companies. While risks remain, especially in the context of macro uncertainty and integration execution, the expert consensus is that Broadcom Inc. has established itself as a leading beneficiary of the AI megatrend. This combination of growth, yield, and defensive characteristics makes it a compelling proposition for both growth and income-focused investors heading into 2026.

What are the key takeaways from Broadcom’s record-setting 2025 results and AI-driven outlook?

• Broadcom Inc. (NASDAQ: AVGO) reported record fourth quarter revenue of $18 billion, marking a 28 percent year-over-year increase, largely fueled by a 74 percent surge in artificial intelligence semiconductor sales.

• The company posted a GAAP net income of $8.5 billion for the quarter, nearly doubling last year’s figure, and a non-GAAP net income of $9.7 billion, with adjusted EBITDA margins at a robust 68 percent.

• For fiscal 2025, Broadcom Inc. achieved $63.9 billion in revenue, up 24 percent year-over-year, and saw annual free cash flow reach $26.9 billion, underscoring exceptional capital efficiency.

• Semiconductor solutions contributed $36.9 billion in annual revenue, while infrastructure software added $27 billion, highlighting strong performance in both hardware and software divisions.

• The Board of Directors increased the quarterly dividend by 10 percent to $0.65 per share, marking the fifteenth consecutive annual hike and reflecting management’s confidence in ongoing cash generation.

• First quarter fiscal 2026 guidance projects revenue of $19.1 billion and a 67 percent adjusted EBITDA margin, with AI semiconductor revenue expected to double to $8.2 billion.

• Institutional sentiment and analyst outlook remain highly positive, with Broadcom Inc. seen as a premier pick for exposure to the AI infrastructure and cloud datacenter boom.

• Management flagged macroeconomic risks, supply chain volatility, and integration challenges following major acquisitions like VMware but remains confident in the company’s disciplined execution.

• Investors and funds have been steadily accumulating Broadcom Inc. shares, encouraged by record profitability, consistent dividend growth, and a clear strategy for capital allocation.

• Broadcom Inc. is increasingly viewed as a top long-term holding for those seeking growth, yield, and leadership in the next era of AI-driven technology infrastructure.