Broadcom (AVGO) Q4 2025 Earnings Call Transcript
View original at finance.yahoo.comBroadcom (AVGO) Q4 2025 Earnings Call Transcript Image source: The Motley Fool. DATE Thursday, Dec. 11, 2025, at 5 p.m. ET CALL PARTICIPANTS President and Chief Executive Officer — Hock Tan Chief Financial Officer — Kirsten Spears Director, Investor Relations — Ji Yoo Need a quote from a Motley Fool analyst?…
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Multiple XPU variants per customer exist for training, inference, reasoning with different memory capacity/bandwidth configurations; content growing generation over generation
80% confidenceQ1 2026 AI revenue doubling YoY is likely to be an accelerating trend as we progress through 2026
80% confidenceSecond half of year when shipping more systems, gross margins will be lower but gross margin dollars will go up, operating margin dollars will go up but margin percentage will come down a bit
80% confidenceSilicon photonics transition point when copper/pluggable optics insufficient is not anytime soon
80% confidenceOperating leverage will benefit at operating margin level even as gross margin will start to deteriorate from system sales
80% confidenceNever seen bookings of this nature over past three months
80% confidenceTPU merchant market substitutes for GPUs are transactional moves, not substitutes for custom ASICs which are strategic multi-year
80% confidenceOpenAI 10GW is agreement to be aligned, separate from committed XPU program which is very advanced stage and will happen very quickly
80% confidenceCustomer tooling concerns are an overblown hypothesis which frankly I do not think will happen
80% confidenceAnother strong year for Broadcom with FY2025 consolidated revenue of $64B, up 24% YoY
80% confidenceGross margin could decline significantly with system ramp, potentially starting with a 6 (60s%), but operating leverage preserves operating margin growth
80% confidenceCustom XPUs offer hardware advantages over GPUs with sparse calls and data routers in hardware versus software kernels
80% confidenceBroadcom has good handle on supply chain bottlenecks because they are part of multiple components in AI systems
80% confidence$73B backlog represents minimum revenue over next six quarters and is expected to grow as more orders come in
80% confidenceOpenAI 10GW agreement timeline is 2027-2029, not 2026, not expecting March in '26
80% confidenceTPU Google Cloud scale could be significant
80% confidence$73B backlog is a snapshot that will grow; supply chain focus is on 3nm/2nm wafers, CoWoS substrate, HBM, advanced packaging
80% confidenceVMware integration is complete, reflected in infrastructure software operating margin improvement to 78% from 72% prior year
80% confidenceDo not see sharp recovery in enterprise spending that is sustainable yet, but do not see it getting any worse
80% confidenceCustom XPU journey is long-term strategic multi-year commitment, not deterred by short-term alternatives
80% confidence$73B backlog over 18 months translates to over $50B for FY2026
80% confidenceFeel pretty good about 2026 supply for AI system components excluding power infrastructure like shells, transformers, gas turbines
80% confidenceSpending momentum by customers for AI continuing to accelerate in 2026
80% confidence