Broadcom Q4 2025 Earnings Call

Summary

Broadcom delivered exceptional Q4 2025 results with record revenue of $18 billion, up 28% year-over-year, driven primarily by AI semiconductors and strong VMware adoption. The company's AI business showed remarkable growth with revenue reaching $6.5 billion in Q4, up 74% year-over-year, representing 10x growth over 11 quarters of reporting. CEO Hock Tan highlighted the company's dominant position in AI infrastructure with a massive $73 billion backlog for AI-related products including XPUs, switches, and optical components to be delivered over the next 18 months. The company secured significant new orders including an additional $11 billion from their fourth customer (Anthropic) and acquired a fifth XPU customer with a $1 billion order. Infrastructure Software maintained strong momentum with $6.9 billion in Q4 revenue, up 19% year-over-year, driven by VMware Cloud Foundation adoption. The company is transitioning from component sales to full system sales for some AI customers, which will impact gross margins but provide operational leverage. Broadcom raised its quarterly dividend by 10% and extended its share repurchase program, demonstrating confidence in continued strong cash flow generation from the AI boom and software business growth.

Key Points

• Record Q4 revenue of $18 billion, up 28% year-over-year, driven by AI semiconductors and VMware
• AI revenue grew 65% year-over-year to $20 billion for fiscal 2025, with Q4 AI semiconductor revenue of $6.5 billion
• Total AI backlog of $73 billion to be delivered over next 18 months
• Acquired fifth XPU customer with $1 billion order, received additional $11 billion order from fourth customer
• Infrastructure Software revenue of $6.9 billion, up 19% year-over-year with strong VMware adoption
• Building Singapore facility for advanced packaging to address supply chain constraints

Action Items

• Deliver $73 billion AI backlog over next 18 months
• Continue building Singapore advanced packaging facility
• Expand capacity for 2-nanometer and 3-nanometer silicon production
• Develop next-generation Tomahawk switches and DSPs
• Progress on OpenAI custom accelerator development program

Decisions

• Increased quarterly dividend to $0.65 per share (10% increase) for fiscal 2026
• Extended share repurchase program with $7.5 billion remaining through end of 2026
• Moving to system-level sales for some AI customers rather than just component sales
• Q1 2026 guidance: $19.1 billion consolidated revenue, $8.2 billion AI revenue

Participants