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Broadcom Inc. (AVGO) shares tumbled approximately 4.92% in premarket trading on December 12, 2025, falling to $386.36 as of 5:19:43 AM EST, after closing at $406.37 the previous day. The sharp decline came despite the semiconductor giant reporting strong fourth-quarter earnings that beat analyst estimates, with revenue reaching $18.015 billion and adjusted earnings per share of $1.95.

The stock reversal followed CEO Hock Tan’s conference call commentary that failed to satisfy investors’ elevated expectations for the company’s artificial intelligence business growth trajectory.
 

Earnings Beat Overshadowed by Outlook Concerns

Broadcom delivered impressive fourth-quarter results, with revenue of $18.015 billion representing a 28% year-over-year increase, primarily driven by a 74% surge in AI semiconductor revenue. The company posted GAAP net income of $8.518 billion and non-GAAP net income of $9.714 billion for the quarter, exceeding analyst expectations.

For the first quarter of fiscal 2026, Broadcom guided revenue to approximately $19.1 billion, above the $18.5 billion analyst consensus, and projected adjusted EBITDA of 67% of revenue.

However, investors were disappointed by CEO Hock Tan’s cautious commentary during the earnings call. He disclosed that the company has a backlog of $73 billion in AI product orders to be shipped over the next six quarters, a figure that some investors found underwhelming given the company’s momentum.

Tan sought to clarify that this was a “minimum” figure and expected “much more as more orders come in,” but the lack of concrete 2026 AI revenue guidance left the market wanting more. His statement that it’s “hard for me to pinpoint what ’26 is going to look like precisely” added to investor uncertainty.
 

AI Margin Pressure Adds to Investor Caution

Adding to investor concerns, CEO Tan warned that total margins were narrowing due to AI product sales, despite the company’s strong overall performance. The announcement of an $11 billion order from AI startup Anthropic in the fourth quarter, following a $10 billion deal in the third quarter, demonstrated robust customer demand. Additionally, Broadcom signed another customer order worth $1 billion, though the client was not identified.

While Tan stated that AI semiconductor revenue would double to $8.2 billion in the first quarter compared to the prior year, driven by custom AI accelerators and Ethernet AI switches, the margin pressure commentary tempered enthusiasm.

The market reaction reflected a broader challenge for high-flying AI stocks: meeting increasingly lofty expectations. Broadcom’s year-to-date return of 76.53% had significantly outpaced the S&P 500’s 17.33% gain, and the stock had surged 123.99% over the past year. With a market capitalization of $1.919 trillion and a forward P/E ratio of 43.29, investors had priced in substantial growth expectations.

The company’s decision to increase its quarterly dividend by 10% to $0.65 per share and its strong free cash flow of $26.9 billion for fiscal 2025 were overshadowed by the uncertain AI revenue trajectory and margin dynamics that emerged from the earnings call.

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