Broadcom(US:AVGO) Benzinga·2025-12-12 07:46Core Viewpoint - Broadcom Inc. reported a strong fourth-quarter earnings performance with record AI revenue, but the stock fell over 4% in after-hours trading due to concerns over future profitability and guidance [1][2]. Financial Performance - The company achieved fourth-quarter revenue of $18.02 billion, surpassing analyst expectations of $17.49 billion [2]. - AI sales surged by 74%, but the market reacted negatively to guidance indicating a drop in gross margins and an increase in the tax rate for fiscal 2026 [2][4]. Profitability Concerns - Management projected a sequential decline of approximately 100 basis points in gross margins for the fiscal first quarter, driven by a shift towards lower-margin AI hardware components [2][3]. - The non-GAAP tax rate is expected to rise from 14% to about 16.5% in 2026, impacting future earnings per share (EPS) [4]. Operational Momentum - Despite the bearish market reaction, Broadcom has a substantial backlog of $73 billion in AI orders, including custom accelerators and networking gear, scheduled for delivery over the next 18 months [5]. - The company secured a $1 billion initial order from its fifth custom silicon customer, although expectations for a partnership with OpenAI were tempered, with a long-term project timeline set for 2027-2029 [6]. Legacy Business Performance - Broadcom's non-AI semiconductor revenue is projected to remain flat year-over-year in the first quarter, with limited signs of recovery in enterprise spending [7]. - The company increased its quarterly dividend by 10% to 65 cents per share, but margin pressures overshadowed the record-breaking revenue figures [7]. Stock Performance - Shares of Broadcom fell by 4.47% in after-hours trading, following a 1.60% decline during the day, despite a year-to-date increase of 75.28% and a 60.68% rise over the last six months [9].