Core Viewpoint - Broadcom (AVGO.US) and Oracle (ORCL.US) experienced significant stock price fluctuations following their earnings reports, with Broadcom's stock dropping 17% over two days. UBS believes the market's reaction was an overreaction and has raised its revenue expectations for Broadcom's AI semiconductor business for fiscal year 2026 to over $60 billion, nearly tripling year-on-year growth, and adjusted the target price from $472 to $475 [1] Group 1 - The company disclosed an AI business order backlog of $73 billion, covering an 18-month period, but management indicated that the actual delivery timeline would be closer to 12 months [2] - In Q4 (ending October), the total order backlog increased by 50% quarter-on-quarter, with AI semiconductor orders doubling. Excluding the new $11 billion order from Anthropic, the remaining backlog still increased by $20-25 billion, primarily from Google and Meta, without including OpenAI's orders [2] - Broadcom expects the delivery of a $21 billion rack order to Anthropic to likely extend into fiscal year 2027 due to the preparation progress of power components, emphasizing that Anthropic is the only rack customer in the backlog [2][3] Group 2 - The company reiterated that the gross margin for its XPU business is approximately 55%, and for its AI networking business, it is around 80%. However, the overall gross margin for the $21 billion revenue from rack products is expected to fall within the 45%-50% range due to the inclusion of resale components [3] - Broadcom's management expressed confidence that AI business revenue for fiscal year 2026 will exceed current market expectations, raising the revenue forecast for fiscal year 2027 to $135 billion, which is 2% higher than market consensus, and increasing the earnings per share (EPS) estimate to $14.15, 1.7% above consensus [3][4] Group 3 - UBS noted that the $21 billion order from Anthropic may be delivered by the end of fiscal year 2026 and continue into the first half of fiscal year 2027, with a projected delivery of $15 billion in fiscal year 2026 and the remaining $6 billion in fiscal year 2027 [4] - The company expects the growth rate of AI business revenue in fiscal year 2026 to surpass that of fiscal year 2025, with a combined gross margin for AI business close to 60% [4][5] - Broadcom's enterprise order backlog increased from $110 billion to $162 billion, with AI-related orders doubling quarter-on-quarter [5] Group 4 - Broadcom addressed concerns regarding Google directly interfacing with foundries, stating that such a scenario is unlikely in the next five years, while emphasizing a long-term strategy to diversify its customer base to mitigate concentration risks [5] - The company noted a trend where AI labs are capturing more market share that was originally expected to be enterprise-level AI markets, as more businesses opt for services from companies like OpenAI and Anthropic rather than fine-tuning large models themselves [5][6] - Broadcom is open to monetizing custom chips through a licensing model if customer demand arises, which could lead to a reduction in the average selling price (ASP) related to Broadcom's IP, but potentially higher overall gross and operating margins [6]