BREAKING: Broadcom jumps as investors bet on Microsoft chip tie-up, all eyes on Dec 11 earnings
Broadcom stock is ripping higher this afternoon. Shares of AVGO are up 2.9 percent to about 401.73, with a session high of 407.10 and a low of 395.00. Traders are piling in ahead of Thursday’s earnings call, and on fresh buzz that Microsoft could shift a custom AI chip program to Broadcom from a rival supplier. The move has Marvell on the back foot. It has AVGO bulls pressing their advantage into a catalyst-filled week.
What is moving AVGO right now
I am hearing active interest across desks in Broadcom’s custom silicon pipeline, tied to big cloud orders. The focus today is on Microsoft. Industry conversations point to talks with Broadcom on next wave AI accelerators and networking, built to Microsoft’s specs. There is no signed contract in hand, and neither side has made an announcement. That said, positioning suggests investors expect clarity soon.
Here is why that matters. Broadcom already benefits from structural AI demand. The company has shipped large volumes for leading AI projects, and it is winning follow-on work in networking. A Microsoft shift would add another hyperscale lane, deepen switching wins, and widen the moat in custom chips. It would also pressure Marvell’s roadmap and could redirect supplier capacity toward AVGO through 2026.
Earnings on December 11 are the next hard check. Management guidance and any color on AI programs will set the tone into year end.
The earnings setup
Wall Street expects a strong quarter. Current consensus looks for revenue near 17.5 billion, up about 24 percent, and EPS around 1.87, up roughly 31 percent. The mix matters more than the headline. Investors want proof that AI hardware and software are both pulling weight.
The company’s model is now a two engine story. One engine is semiconductors, led by custom AI accelerators, high end networking, and switching silicon. The other engine is software, including the VMware platform, which adds recurring revenue and cash flow. That blend has supported higher margins and steady buybacks and dividends.
On the call, watch these items:
- AI revenue run rate, backlog, and visibility into 2026 shipments
- Custom chip margins, given packaging and foundry costs
- VMware cross sell progress and churn trends
- Capital return plans relative to free cash flow
Microsoft chatter, what my reporting shows
My checks with supply chain contacts point to active discussions between Microsoft’s silicon teams and Broadcom on bespoke AI parts. The likely timing for volume would be late 2026, given design cycles and packaging lead times. This lines up with the next wave of cloud data center builds. A win of that size would be measured in billions over several years, not quarters.
To be clear, I have not confirmed a signed award. Pricing, yield targets, and software stacks are still moving pieces. Even so, the market is trading the probability today, not waiting for a press release. That is why the stock is reacting ahead of earnings.
If Broadcom denies the engagement, or if Microsoft sticks with an incumbent supplier, near term sentiment could snap back. High expectations cut both ways.
Competition, valuation, and the macro picture
Broadcom does not try to be Nvidia. It does not sell a general purpose GPU. It builds custom accelerators for specific workloads, and it sells the high speed plumbing that connects those systems. That strategy fits hyperscalers that want control of cost, power, and performance. It also keeps Broadcom away from the most crowded part of the AI stack.
Marvell is the nearer peer in custom silicon and networking. A Microsoft move toward Broadcom would be a direct hit to Marvell’s long term plan. For AVGO, it would support faster growth in ASICs and switching, and could push annual AI revenue higher through 2027.
Valuation carries a premium after a near 100 percent one year run. The market is paying up for durable AI cash flows, plus the stability of software. That leaves less room for error. Any slip in delivery, export rules that choke supply, or a pause in cloud capex could compress the multiple.
Into the print, size positions with scenarios. A confirmed hyperscale win can extend momentum, a cold shower on the rumor can reset the stock to support levels.
Investment view
For traders, the setup is simple. You have a strong tape, a credible AI story, and a near term catalyst. Implied volatility will be high. Manage risk.
For long term investors, the question is durability. Can Broadcom turn one off wins into a steady AI franchise across multiple cloud giants, while expanding software margins. If yes, earnings power rises and the premium looks fair. If no, the stock leans on buybacks and dividends to hold its ground.
Frequently Asked Questions
Q: Why is AVGO up today?
A: Buyers are reacting to talk of a Microsoft custom chip partnership and positioning for the December 11 earnings report.
Q: What would a Microsoft deal mean for Broadcom?
A: It would add a large, multi year AI revenue stream, strengthen networking pull through, and weaken a key competitor.
Q: What are the key numbers to watch on earnings?
A: Revenue near 17.5 billion and EPS around 1.87. More important, AI backlog, custom chip margins, and VMware updates.
Q: How does Broadcom compete with Nvidia and Marvell?
A: Broadcom builds custom accelerators and high speed networking. Nvidia sells general purpose GPUs. Marvell competes in custom silicon and networking.
Q: Is the stock expensive here?
A: It trades at a premium due to AI growth and software cash flow. That is fine if momentum holds, but it raises downside risk on bad news.
Broadcom just put another catalyst on the board, and the stock is acting like it. The next word that matters comes Thursday. If management confirms the AI runway and adds clarity on hyperscale programs, the rally can run. If not, expect a fast debate over how much AI is priced in already.
