Broadcom's AI Momentum Hits Parabolic Levels Despite Post-Earnings Stock Volatility

Broadcom demonstrated remarkable resilience in its artificial intelligence business following the release of Q4 FY2025 earnings on December 11, even as market sentiment proved decidedly mixed. The semiconductor powerhouse reported revenue of $18.02 billion, representing 28% year-over-year growth and surpassing analyst estimates of $17.46 billion. Adjusted earnings per share reached $1.95, comfortably exceeding expectations of $1.87.

The standout performance came from Broadcom’s AI semiconductor division, which grew 74%—substantially ahead of the company’s own 66% guidance. Management projected this parabolic growth trajectory would continue, with AI semiconductor revenue expected to double year-over-year in the upcoming quarter. This extraordinary expansion underscores how deeply embedded Broadcom has become in the infrastructure powering artificial intelligence development globally.

The XPU Customer Expansion Story

During the earnings call, CEO Hock Tan revealed significant developments in Broadcom’s custom chip ecosystem. The company disclosed that Anthropic, previously identified as its fourth XPU customer, has accelerated its commitment dramatically. After placing an initial $10 billion order last quarter, Anthropic doubled down with an additional $11 billion order in Q4—signaling extraordinary confidence in Broadcom’s technology roadmap.

Beyond Anthropic, Broadcom onboarded a fifth unnamed XPU customer with an initial $1 billion order. While some market observers viewed this smaller initial commitment as underwhelming, the Anthropic precedent suggests these relationships often expand substantially over subsequent quarters.

The company also provided clarity on its partnership with Alphabet regarding tensor processing units. Broadcom confirmed that Google’s internally-developed TPUs are being made available to external customers, with Apple identified as one such buyer. Management stressed that external TPU deployment “could be significant” as the ecosystem matures.

Backlogs Exceed $73 Billion, Margins Compress

Broadcom’s total AI backlog now stands beyond $73 billion, with management expecting this to convert into revenue over the subsequent 18 months. Leadership emphasized that additional orders remain highly probable during this timeframe, suggesting actual AI revenue could substantially exceed current backlog figures.

The company’s Infrastructure Software segment, which includes the VMware acquisition, grew 19% in the quarter—accelerating from 17% previously. This acceleration demonstrates sustained momentum even as Broadcom redirects significant resources toward AI opportunities.

However, gross and operating margins face inevitable compression as AI semiconductors, which carry lower margin profiles, become an increasingly dominant portion of total revenue. CFO Kirsten Spears indicated the margin decline would be “modest,” though management projects Infrastructure Software growth will decelerate to low double-digit rates in FY2026.

Market Perception Gap

The stock’s volatile after-hours trading—rising 3% immediately post-announcement before reversing to decline 4% after the earnings call concluded—reflects a potential disconnect between Broadcom’s operational trajectory and investor expectations. The $73 billion backlog figure apparently fell short of some market projections, despite representing extraordinary growth opportunities.

Yet Broadcom’s positioning within the AI supply chain appears increasingly durable. With the Tomahawk 6 AI switch commanding a $10 billion backlog alone and customer commitments continuing to expand, the semiconductor specialist is capturing meaningful upside from accelerating artificial intelligence infrastructure buildout. The company’s ability to add customers, expand existing relationships, and achieve growth rates substantially exceeding guidance suggests operational momentum remains firmly intact regardless of short-term market reactions.