Breaking: Broadcom jumps as AI deals stack up, investors eye earnings
Broadcom is on the move. AVGO is trading near 401 today, up about 2.7 percent intraday after touching fresh highs around 403. Buyers are chasing the stock on growing signs that Broadcom is winning big in custom AI chips, while its software arm keeps adding steady cash flow. The setup into next week’s earnings is now front and center.
What is moving AVGO right now
I have learned that Microsoft is weighing a shift in a custom chip project toward Broadcom. That possibility hit rival Marvell and lifted AVGO from the open. The market read is simple. If Microsoft expands with Broadcom, more hyperscalers could follow. That means more custom AI accelerators, more networking chips, and stickier long term demand.
Traders are also positioning ahead of Broadcom’s December 11 report. Consensus looks for about 31 percent EPS growth to 1.87 and revenue near 17.5 billion, up roughly 24 percent. The bar is high, but the order book for AI compute is higher. Recent checks point to multi year accelerator programs tied to leading cloud players. One large XPU order linked to OpenAI is slated to begin shipping in the second half of 2026. That is the kind of backlog that smooths cycles and supports capacity planning.
The market angle, and why this matters
AI compute is shifting. Off the shelf GPUs still rule, yet custom silicon is gaining share at the top accounts. Broadcom sits in a sweet spot. It designs custom AI chips, builds switch silicon for data centers, and packages complex devices at scale. That mix serves the same customer budgets, which are rising fast as cloud capex resets for AI.
Nvidia is not standing still. But Broadcom’s role is different. It does not need to win every training cluster. It needs to win a handful of very large, high margin custom programs and lock them in for years. That is already happening across search, consumer AI, and enterprise clouds. Add in networking attach, and revenue per customer grows even faster.
VMware gives Broadcom a second engine. Software renewals and pricing discipline have lifted margins and free cash flow. That cash helps fund AI buildouts, foundry commitments, and shareholder returns. Hardware volatility is easier to manage when software is paying the bills.
Watch the link between AI chips and networking. Each accelerator sale often pulls through higher switch and optics demand.
Earnings setup, and what I will watch
Broadcom reports on December 11. The stock is near highs, so delivery and guidance both matter.
Key watch items:
- AI accelerator revenue mix and visibility into 2026 shipments
- Hyperscaler purchase commitments, timing, and any new design wins
- VMware driven software growth, retention, and margin cadence
- Capital return plans, including buybacks and dividend path
If management raises the AI revenue outlook or confirms another top tier cloud program, the stock can press higher into year end. If tone is cautious, the recent run invites profit taking.
Economic implications of a bigger Broadcom
The AI buildout is a real capex cycle. A larger Broadcom footprint means more dollars pulled into advanced packaging, high bandwidth memory, and cloud networking. That supports upstream suppliers and foundry partners. It also pressures smaller chip vendors that lack scale or deep customer ties.
For the wider market, a steadier Broadcom can reduce earnings volatility in the semis group. Recurring software and long contracts act like shock absorbers. If that holds, AI leadership names could keep pulling index earnings higher into 2026.
Valuation and risk check
The rally has been sharp. At these levels, investors want proof of durable share gains in AI compute. They also want to see software stickiness hold through renewals. Any slip in the Microsoft opportunity, or a pause in hyperscaler spending, would test the bull case. Supply bottlenecks, such as advanced packaging or memory, could also push revenue to the right.
Still, the setup is clear. Broadcom has scarce assets, aligned with the biggest tech budgets in the world. Execution now has to meet the moment.
The stock is priced for strong execution. A miss on AI timing or margins could hit the shares hard.
