Broadcom's Biggest Test Yet: Will Q4 Earnings Spark Another Rally?

On Dec. 11, semiconductor giant Broadcom (NASDAQ: AVGO) will report its Q4 fiscal year 2025 (FY2025) earnings. The company impressed investors when it last reported.

Shares gained by 9%, closing near $334 on Sept. 5 in reaction to the results. Since then, Broadcom's shares have continued to move higher, closing near $381 on Dec. 4.

Key factors to watch in Broadcom’s upcoming earnings include core segment performance, AI-related demand trends, and forward guidance. Upside potential may depend on the company’s ability to exceed expectations in these areas and deliver another round of positive surprises to the market.

AVGO’s Q4: Wall Street Expectations Likely Don’t Tell the Full Story

Next quarter, Wall Street expects Broadcom to post revenue of just under $17.5 billion. This would equate to a growth rate of around 24%. Analysts see adjusted EPS coming in at $1.87, or growth of 32%. These numbers don’t appear overly difficult for Broadcom to hit. During the first three quarters of 2025, the company has averaged revenue growth of around 22.3%, and adjusted EPS growth near 42%. Wall Street’s estimates are also only slightly above the company’s Q4 guidance. At a segment level, Broadcom’s artificial intelligence (AI) semiconductor revenue will be the biggest focus. Broadcom is forecasting robust growth in this segment of 66%.

Despite Wall Street’s relatively low estimates, it is worth noting that Broadcom trades at a 45x forward price-to-earnings (P/E) ratio. The stock has never traded at this high a multiple leading up to an earnings release. Thus, the market’s actual expectations may be substantially higher than analyst estimates. Broadcom may need to do much more than post in-line earnings to avoid a sell-off. This would involve putting up considerable beats or giving investors something else to cheer about. Let’s look at some of these possibilities below.

Potential Catalysts: Guidance, AI-Chip Customers, SAM Estimate

There are several ways that Broadcom could impress markets, other than posting big beats in Q4. The most obvious of which is issuing stronger-than-expected guidance for Q1 2026. Notably, Broadcom does not provide full-year guidance.

The company could also announce that it has secured another custom AI chip buyer. This was what led shares to gain after its September earnings. Based on past commentary, the company currently has three prospective customers with whom it is in negotiations.

The biggest factor that could lead Broadcom shares to ride higher post-earnings is if the firm lifts its AI serviceable addressable market (SAM) estimate. This estimate looks at the total AI market that Broadcom could realistically serve today, given its current products and capabilities. In Q4 2024, Broadcom pinned its AI SAM estimate at $60 billion to $90 billion for FY2027.

Since then, hyperscaler capital expenditure estimates have increased substantially. Broadcom competitor Marvell Technology (NASDAQ: MRVL) referenced this in its Dec. 2 earnings call. As a result, Marvell significantly increased its data center revenue growth estimates for next year. Broadcom has also added two new customers, including OpenAI and another unknown firm. Its largest custom-chip buyer, Google parent company Alphabet (NASDAQ: GOOGL), looks poised to ramp up its use of tensor processing units (TPUs) in 2026. With Broadcom being Google’s TPU development partner, more demand for these chips benefits the firm.

Broadcom has said in the past that it “probably” won’t update its AI SAM until 2026. However, the factors outlined above could give Broadcom the visibility it needs to increase its AI SAM estimates sooner than expected. If this happens, and the estimate is high enough, it could be a significant positive catalyst for shares. On the other hand, shares could get hit if the market views the estimate as underwhelming.

Broadcom: High Expectations for a High-Performance Company

Overall, the expectations for Broadcom’s Q4 2025 earnings are fairly high. Expectations could move higher or lower by Dec. 11, depending on the movement in shares. At this point, if the company doesn’t post significant beats or announce a substantial development, it wouldn’t be surprising to see shares sell off after earnings.

Still, Broadcom has continually proved that it is a top-tier company and tech stock.  This makes betting against the firm difficult. No one knows what will happen during any given earnings release. There is always the potential that unforeseen events can lead to a large gain or fall in shares. However, Broadcom still looks like a strong long-term AI play.

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