Broadcom (AVGO) Stock: Is This Your Chance to Buy the Dip?

TLDR

• Truist raised Broadcom’s price target to $510 from $500, maintaining a Buy rating based on strong AI infrastructure semiconductor growth expectations
• The company reported Q4 2025 revenue of $18 billion, up 28% year-over-year, with AI semiconductor revenue jumping 74%
• Broadcom’s stock dropped over 11% after earnings due to margin compression concerns and reduced AI backlog from $110 billion to $73 billion
• Management expects Q1 2026 revenue of $19.1 billion with AI revenue doubling to $8.2 billion
• Full-year fiscal 2025 adjusted EBITDA hit a record $43 billion, up 35% year-over-year, with free cash flow of $26.9 billion

Broadcom’s stock has been on a wild ride lately. The shares jumped 52% over the past year but took a sharp 11% hit after the company’s December 11 earnings report.

Broadcom Inc., AVGO

The reaction seems harsh given the numbers. Revenue hit $18 billion in Q4 2025, beating Wall Street’s $17.5 billion estimate. Earnings came in at $1.95 per share, crushing the $1.87 consensus.

The AI business is the real story here. AI semiconductor revenue rocketed 74% year-over-year in Q4. That’s serious growth.

But investors got spooked by a few things. First, Broadcom’s AI backlog shrank from $110 billion to $73 billion between quarters. Second, management didn’t provide full-year guidance for fiscal 2026.

The margin picture also raised eyebrows. Management said gross margins would drop 100 basis points in Q1 as AI products take up a bigger slice of the revenue pie.

Truist doesn’t seem worried. The firm bumped its price target to $510 on December 19, up from $500. They see AI infrastructure semiconductor stocks as cheap relative to their growth rates.

Revenue Growth Accelerating Into 2026

Broadcom’s Q1 2026 guidance tells a different story than the post-earnings selloff suggests. The company expects revenue of $19.1 billion, well above the $18.5 billion analyst consensus. That represents 28% year-over-year growth.

AI revenue is set to double in Q1 to $8.2 billion. For context, Broadcom’s total AI revenue grew 65% to $20 billion in fiscal 2025.

The math gets interesting when you look at the full-year potential. The company’s $73 billion AI backlog should be fulfilled over six quarters. That works out to about $12 billion per quarter in AI revenue.

Over four quarters, that could mean $48 billion in AI revenue for fiscal 2026. Last year’s AI revenue was $20 billion. We’re talking about more than doubling.

The non-AI business grew 11% last year to $43.9 billion. If that pace holds, total revenue could hit $97 billion in fiscal 2026. That would be 51% growth compared to 23% last year.

Analyst Sentiment Remains Strong

New Street also raised its price target recently, moving to $420 from $400 while keeping a Buy rating. An insider bought $325,129 worth of shares according to SEC filings.

The analyst community is largely bullish. Ninety-two percent of the 50 analysts covering Broadcom rate it a Buy. The median price target sits at $475, implying 39% upside from current levels.

The valuation looks stretched at 26 times sales and 71 times trailing earnings. But the growth trajectory supports those multiples.

Broadcom reported adjusted EBITDA of $43 billion for fiscal 2025, up 35% year-over-year. Free cash flow remained strong at $26.9 billion. The company expects adjusted EBITDA of 67% of revenue in Q1 2026.

The total consolidated backlog stood at $162 billion last quarter, more than double the AI-specific backlog. Broadcom sells infrastructure software, networking components, and smartphone chips beyond AI semiconductors. AI accounted for roughly a third of last year’s $63 billion in revenue.

Management expects AI revenue to double in Q1 2026 to $8.2 billion, setting up potential for $48 billion in AI revenue over the next four quarters based on the current backlog fulfillment timeline.

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