Broadcom(US:AVGO)2025-12-11 23:00Financial Data and Key Metrics Changes - Consolidated revenue for Q4 2025 reached a record $18 billion, up 28% year on year, driven by strong growth in AI semiconductors and infrastructure software [5][12] - For fiscal year 2025, consolidated revenue grew 24% year on year to a record $64 billion, with AI revenue increasing 65% to $20 billion [4][15] - Adjusted EBITDA for Q4 was a record $12.12 billion, up 34% year on year, representing 68% of revenue [5][12] Business Line Data and Key Metrics Changes - Semiconductor revenue for Q4 was $11.1 billion, up 35% year on year, with AI semiconductor revenue of $6.5 billion, up 74% year on year [5][13] - Infrastructure software revenue for Q4 was $6.9 billion, up 19% year on year, with total contract value booked exceeding $10.4 billion [10][13] Market Data and Key Metrics Changes - AI networking demand is strong, with a current order backlog for AI switches exceeding $10 billion [8][9] - Non-AI semiconductor revenue for Q4 was $4.6 billion, up 2% year on year, but flat sequentially due to wireless seasonality [9][10] Company Strategy and Development Direction - The company expects AI revenue to continue to accelerate and drive most of its growth, while non-AI semiconductor revenue is anticipated to remain stable [11][17] - Infrastructure software revenue is expected to grow at a low double-digit percentage, driven by VMware growth [11][17] Management's Comments on Operating Environment and Future Outlook - Management noted that spending momentum for AI is expected to continue accelerating into 2026, with a forecast of $19.1 billion in consolidated revenue for Q1 2026, up 28% year on year [11][17] - The company anticipates that the AI backlog of $73 billion will be delivered over the next 18 months, with expectations for further bookings [9][31] Other Important Information - The company announced a 10% increase in its quarterly common stock cash dividend to $0.65 per share, marking the 15th consecutive increase since initiating dividends in fiscal 2011 [16] - The company has a gross principal fixed-rate debt of $67.1 billion with a weighted average coupon rate of 4% [14] Q&A Session Summary Question: Clarification on AI backlog and customer-owned tooling - Management confirmed the $73 billion backlog for AI components and expressed confidence in continued bookings, stating that the concept of customer-owned tooling is overblown [20][21][24] Question: Impact of TPUs on market dynamics - Management indicated that the transition from GPUs to TPUs is a transactional move, while developing custom accelerators is a long-term strategic decision [27][28] Question: AI revenue growth expectations - Management acknowledged the dynamic nature of AI backlog and indicated that while they initially projected 60%-70% growth for AI revenues in 2026, the trend appears to be accelerating [46][47] Question: OpenAI contract details - Management confirmed that the OpenAI contract is a multi-year journey, with significant contributions expected from 2027 to 2029, but not much in 2026 [52][74] Question: Supply chain resiliency and bottlenecks - Management expressed confidence in supply chain management and indicated that they are addressing potential bottlenecks proactively [67][70]