Financial Report Preview | “Google Chain Core” Broadcom (AVGO.US) Q4 Earnings Report Is About to Be Announced, and Performance Is Expected to Exceed Expectations Driven by AI Engines

The Zhitong Finance App learned that Broadcom (AVGO.US) will announce financial results for the fourth quarter of fiscal year 2025 after the market on December 11 EST. Wall Street currently expects Broadcom's Q4 revenue to grow 24.5% year over year to US$17.5 billion, and adjusted earnings per share will increase 31% year over year to US$1.87. As a key part of the “GOOGL.US (GOOGL.US) ecosystem”, benefiting from Google's opening of TPU usage/sales to external customers and strong growth in overall artificial intelligence (AI) spending, Broadcom is expected to once again exceed market expectations at that time.

Like Nvidia, Broadcom is seen as a major beneficiary of the surge in AI spending, with data centers relying on its custom chips and network components to handle AI computing workloads. As one of the largest high-performance application-specific integrated circuit (ASIC) suppliers for hyperscale computing companies, Broadcom's performance was strong this year. The stock price rose by nearly 70% during the year, and rose by more than 18% in the fourth quarter.

The core of the “Google Ecosystem”

In addition to its excellent performance, Broadcom is at the core of the “Google ecosystem”, which is why investors see it as a derivative investment target for Google's growing dominant position in the AI field. The connection between the two companies lies in ASIC — Google is the main customer of Broadcom's ASIC business, and Broadcom helped design and manufacture Google's TPU. This is Google's internal dedicated AI chip for the company's internal AI infrastructure. It is through its TPU that Google has trained Gemini 3 — currently the world's leading multi-modality and inference model, and has very competitive performance in mainstream AI tasks such as proxy programming.

Google's TPU is considered a competitor to Nvidia graphics processing units (GPUs) in AI workloads. Although most big language models and AI workloads still rely on Nvidia's GPUs, recent industry interest further supports the growing momentum of Google's TPU. Among them are reports that Meta (META.US) is considering spending billions of dollars to buy Google TPU starting in 2027. Previously, Anthropic recently expanded its partnership with Google, promising to use up to 1 million pieces of TPU from 2026.

Gil Luria, head of technical research at DA Davidson, stated: “If businesses want to reduce their reliance on Nvidia, Google's TPU is a great choice, which means we have every reason to be optimistic. The chip business may end up being more valuable than Google Cloud. But even if Google never sells chips abroad, better chips mean better and more efficient cloud services.” He estimated that if Google seriously promotes the TPU sales business, it may occupy 20% of the AI chip market within a few years, which will create a business scale of about 900 billion US dollars.

In addition to Google, Broadcom has also partnered with OpenAI and Meta. In August, it was reported that Meta chose to cooperate with Broadcom to create custom ASIC chips. In October, OpenAI and Broadcom announced that they will cooperate to develop a customized AI accelerator with a total computing power of 10 gigawatts. The two sides have reached a long-term agreement to jointly develop and supply AI accelerators, and signed a letter of intent to invest to deploy a rack containing AI accelerators and Broadcom network solutions. In addition, it was recently reported that Microsoft is in talks with Broadcom to design future custom chips.

Partnerships with companies such as Google and OpenAI are undoubtedly the key driving force behind Broadcom's performance growth in this wave of AI. Citi predicts that Broadcom's AI business revenue for the 2026 fiscal year is expected to increase 147% year over year to about US$49.3 billion, and its share of total revenue will soar to 53% from 31% in FY2025. Citi also predicts that Broadcom will provide revenue guidance for the first fiscal quarter of fiscal year 2026, which is higher than market expectations, and is expected to reach 18 billion US dollars (market consensus is 18.4 billion US dollars. Here, Citi's forecast is slightly conservative but still optimistic about the upward space brought about by Google's TPU volume), and gross margin is expected to remain high at 76.0%.

Goldman Sachs, on the other hand, expects that Broadcom's business revenue for the 2026 fiscal year will be 45.4 billion US dollars (up 128% year over year), and will further grow to 77.3 billion US dollars in the 2027 fiscal year. Goldman Sachs specifically mentioned that investors should focus on the positive data points after the release of Google Gemini 3 and the large-scale application of Broadcom's Tomahawk 6 chip in the field of network connectivity.

At a time when the market is still debating the AI bubble (although it has cooled down from last month), if Broadcom can deliver results that exceed market expectations and give an optimistic outlook this week, it may strengthen investors' confidence in this AI wave. This financial report will not only be a summary of the past fiscal quarter of FY2025, but also a weather vane on whether the 2026 AI capital expenditure feast will continue.

Sing a lot of big songs before their achievements

Based on optimism about the results of the next two years, both Citibank and Goldman Sachs have given positive price targets for Broadcom. Citi has reaffirmed its “buy” rating for Broadcom, with a price target of $415. This valuation is based on a price-earnings ratio of 30 times the estimated earnings per share for fiscal year 2027. The bank's current earnings per share forecast for Broadcom's fiscal year 2026 and fiscal year 2027 are about 10% higher than market consensus, respectively.

Goldman Sachs raised its price target for Broadcom from $380 to $435. Goldman Sachs also raised its earnings per share forecast for Broadcom's 2026 and 2027 fiscal year (an average increase of 14%), and believes that the market has yet to fully absorb the expectation that AI revenue will double in FY2026.

Jefferies analyst Blayne Curtis listed Broadcom as the preferred stock earlier last month and said ASIC is facing an “inflection point” as Google's demand for custom chips continues to grow. “Google has been Broadcom's main ASIC customer for a long time, but these order volumes should become more meaningful in 2026/2027,” he said in a report. The number of monthly tokens processed by Google continues to rise and announced that it reached 1,300 trillion in October, up from 480 trillion in April 2025. This number should grow further as the multimodal model demands computational power.” Blayne Curtis gave Broadcom a “buy” rating and raised its target price by $65 to $480.

Dan Ives, head of global technology research at Wedbush, said he is very optimistic about Broadcom and Google. Dan Ives holds both stocks in the Dan IVES Wedbush AI Revolution ETF (IVES) it manages. He said, “Broadcom and Google are new AI investment targets that the market is being rediscovered. The ASIC chip market is huge, and Google is leading this trend. This is probably the most tested ASIC chip on the market, and the AI revolution is still in its early stages... Market sentiment can quickly shift to today's very optimistic state, which is a historic shift.”

Based on enthusiasm for the partnership between Broadcom and Google, Melius Research analyst Ben Reitzes reiterated Broadcom's “buy” rating and raised its target price by $60 to $475. Ben Reitzes said, “Google and its partner Broadcom have been co-developing this custom ASIC since 2016, and it's currently in the 7th generation. Other than Nvidia GPUs for AI workloads, TPU is the most proven ASIC on the market—and now it has the most tangible growth momentum. The early decision to develop this product is now beginning to show positive benefits — contributing to both Broadcom's AI revenue and Google Cloud's growth.” He added: “This is certainly a good thing for Google, but it's probably better for Broadcom. Thanks to its relationships with Google and many other partners hoping to gain this part of design expertise, Broadcom's AI revenue is likely to have significant upside.” He also noted that “TPU is rapidly becoming a more important component of Google's growth strategy.”