Broadcom(US:AVGO) 智通财经网·2025-12-16 07:16Core Viewpoint - Broadcom's stock experienced a significant decline, with a drop of 11.43% on Friday and an additional 6% on Monday, raising questions about the reasonableness of the sell-off despite strong financial performance [1][4]. Financial Performance - For Q4 of FY 2025, Broadcom reported revenues of $18 billion, a year-over-year increase of 28%, and a diluted earnings per share (EPS) of $1.74, up 93% from the previous year [4][5]. - Semiconductor solutions generated $11.07 billion in revenue, accounting for 61% of total revenue and growing 35% year-over-year, while infrastructure software contributed $6.94 billion, representing 39% of total revenue with a 19% increase [5][7]. - Free cash flow for the quarter reached $7.5 billion, representing 41.4% of revenue and a 36% increase compared to the previous year [7][8]. Cash Flow and Shareholder Returns - For FY 2025, Broadcom's total free cash flow was $26.91 billion, a 39% increase from FY 2024, with a free cash flow margin of 42.1% [8][9]. - The company announced a 10% increase in dividends for Q1 FY 2026, reducing long-term debt by $4.3 billion, and extending its stock buyback program with a remaining balance of $7.5 billion [9][10]. AI Orders and Market Position - Broadcom secured a $11 billion order from Anthropic, expected to be delivered by the end of 2026, and reported a backlog of over $73 billion in AI-related orders, which is anticipated to be fulfilled within the next 18 months [10][11]. - The CEO emphasized that the $73 billion backlog represents the minimum expected revenue from AI over the next six quarters, with additional orders likely to increase this figure [11][12]. Analyst Misinterpretations - Analysts misread the significance of the $73 billion backlog, failing to understand the CEO's conservative guidance style and comparing Broadcom unfavorably to Oracle, which is deemed inappropriate given Broadcom's strong cash flow and debt reduction [12][15]. - The market's reaction to the backlog was seen as overly emotional, with the CEO indicating that the order flow is expected to accelerate, contradicting the negative sentiment [12][23]. Valuation and Market Outlook - Despite the recent stock decline, Broadcom's valuation remains high, with a trailing P/E ratio of 30.8, reflecting the market's willingness to pay a premium for high-quality growth companies [17][20]. - Analysts have raised Broadcom's fair value estimate from $365 to $480, highlighting the company's strong revenue growth and potential for continued performance in the AI sector [21][20].