Why Broadcom Stock Fell 14.1% in December

Core Insights - Broadcom's shares declined 14.1% in December, contrasting with a flat S&P 500 and a slightly negative Nasdaq Composite [1] - Despite the December decline, Broadcom achieved a strong return of 50.4% for the year 2025, outperforming both the S&P 500 and Nvidia [2] Financial Performance - Broadcom reported robust quarterly results for Q4 fiscal 2025, with revenue growing 28% year-over-year to $18.02 billion, driven by a 74% surge in AI semiconductor revenue [5] - Adjusted net income for the quarter was $9.71 billion, or $1.95 per share, reflecting a 37% year-over-year increase, surpassing Wall Street's expectation of $1.87 [6] Investor Concerns - The significant drop in stock price was primarily due to management's guidance indicating a decline in gross margin for fiscal Q1, expected to decrease by approximately 100 basis points from 77.9% in Q4 [6] - The anticipated decline in gross margin is attributed to a shift in product mix, with soaring custom AI chip sales having lower margins compared to the infrastructure software segment [6]