Broadcom(US:AVGO)2025-11-26 14:15Summary of Broadcom Inc. (AVGO) Conference Call Company Overview - Company: Broadcom Inc. (AVGO) - Industry: Semiconductors and Infrastructure Software Key Points and Arguments Financial Performance Expectations - 4Q Performance: Anticipation of a solid quarter with strong momentum expected to drive AI revenue growth in FY26 [1][3] - AI Revenue Guidance: Updated FY26 AI revenue guidance is expected to exceed previous estimates of 100% year-over-year (YoY) growth, with forecasts of $45.4 billion for FY26 and $77.3 billion for FY27, representing growth rates of +128% and +70% YoY respectively [3][4] Market Dynamics - Investor Sentiment: Investors are positioned positively due to strong results from peers like Nvidia and positive data points from Google, particularly following the launch of Gemini 3 [2][4] - Key Customers: Focus on contributions from major customers such as Google and OpenAI, with expectations of robust spending trends [4][5] Margin and Revenue Insights - Gross Margin Trajectory: Attention on margin progression in FY26 due to expected gross margin dilution from the custom XPU business, with XPU revenue projected to ramp up over +160% YoY [4] - Revenue Segmentation: Breakdown of revenue estimates includes $6.2 billion from AI Semiconductors and $4.6 billion from Non-AI Semiconductors for FY26 [9] Stock Movement Influencers - Potential Stock Drivers: Key factors that could influence stock movement include updated AI revenue guidance, contributions from Google and OpenAI, and margin progression [4][5] - Market Positioning: Some upside to FY26 AI revenue guidance is already priced into the stock, with incremental data points related to spending trends and new customer onboarding being critical for near-term stock performance [5] Earnings Estimates - EPS Adjustments: FY26 and FY27 EPS estimates have been raised by an average of 14% due to higher AI revenue expectations, with new estimates for FY28, FY29, and FY30 introduced at $17.35, $20.00, and $22.40 respectively [6] Price Target and Risks - Price Target: The 12-month target price has been increased to $435 from $380, based on a 38X P/E multiple applied to the normalized EPS estimate of $11.50 [10] - Downside Risks: Key risks include a slowdown in AI infrastructure spending, potential share loss in the custom compute franchise, persistent inventory digestion in non-AI segments, and increased competition in VMware [10] Additional Important Information - Market Capitalization: Broadcom's market cap is approximately $1.9 trillion [11] - Revenue Estimates: Total revenue estimates for FY26 are projected at $92.2 billion, with a significant increase in revenue expected in subsequent years [11] - Investment Banking Relationships: Goldman Sachs has ongoing investment banking relationships with Broadcom, which may present potential conflicts of interest [7][20] This summary encapsulates the critical insights and projections regarding Broadcom Inc. as discussed in the conference call, highlighting the company's financial expectations, market dynamics, and potential risks.