Broadcom Earnings Preview: What Traders and Investors Should Watch

THE SETUP: WHY THIS EARNINGS MATTERS

Broadcom has evolved into a cornerstone of the AI ecosystem. While Nvidia captures most of the GPU spotlight, Broadcom’s role is structural - they're the company building the pipes that connect AI chips, designing custom silicon for tech giants, and now controlling VMware's enterprise software empire.

Thursday's earnings aren't just numbers - they're a referendum on whether AI infrastructure spending can justify the mind-bending valuations we're seeing across tech.

Analysts remain overwhelmingly bullish, with 41 out of 43 ratings at Buy or Strong Buy, and a mean price target of $301.31 (about 1% upside from current levels). Everyone expects Broadcom to crush it. The question is whether they can raise guidance high enough to justify a stock that's already priced for perfection.

Four Reasons the Bulls Aren’t Backing Down

• Custom Silicon
  Broadcom builds the brains behind Google’s TPUs, Meta’s chips, and is rumored to be working with Apple and OpenAI. Any new design win could be a major catalyst.
• Networking Powerhouse
  Its Tomahawk switches are the backbone of AI data centers. AI networking revenue surged +170% YoY last quarter, with Q3 guidance at $5.1B. The key is proving this growth is sustainable.
• VMware Transformation
  By pushing customers into multi-year VMware Cloud Foundation contracts, Broadcom is locking in steady recurring revenue and deeper ties to AI workloads.
• Hyperscaler Spending
  Google just boosted 2025 capex by $10B to $85B. If Broadcom confirms those dollars are flowing into its chips and networking, Q4 guidance could beat Wall Street’s $17B forecast.

Stock reaction:

A strong beat + higher guide could drive shares up (Broadcom’s typical post-earnings swing is around 5–8%, some moves stretched toward 10%.)

Bear Case: Downside Risks

What could weigh on the stock:

• Signs of order delays, especially after Marvell’s stumble.
• Sharper margin pressure from AI mix than expected.
• VMware integration or customer adoption issues.
• Indications that hyperscaler capex growth is slowing.

Risk factor:

With peers already showing cracks, investors are sensitive to any hint that AI infrastructure spending is cooling.

THE VALUATION REALITY

Broadcom isn't cheap by traditional metrics, but maybe it's not supposed to be.

Broadcom’s P/E is elevated by any standard - over 100x trailing earnings, versus an industry range that often sits between 20x and 30x. Source: refinitiv

While its EPS growth (~34%) supports some premium, the multiple looks stretched even compared with Nvidia (50x, 53% growth) or AMD (97x, 26% growth).

That said, the bull case is that: AI semiconductor revenue is expected to grow ~60% YoY in FY25, with a near-monopoly in high-speed networking, and VMware’s recurring revenue smoothing cyclicality. The real debate is whether those pillars justify paying 3–5x the industry multiple, or whether expectations have simply run ahead of fundamentals

TECHNICAL SETUP & TIMING

Broadcom broke below its uptrend channel, briefly retested from above, and failed again. The stock appears to be setting up for a significant move post-earnings.

Volatility has increased, with $281 as key support and $310–318 as resistance into earnings.

THE BOTTOM LINE

Broadcom heads into Thursday with expected strength in AI networking and custom chips, VMware adding steady recurring revenue. The setup leans toward a beat and stronger Q4 guide, even if margins slip a bit.

For Traders: This isn’t just about earnings, it’s a test of whether AI spending can keep driving the tech rally.

For investors: Broadcom offers broad AI exposure with less risk than single-focus chipmakers

The Stakes:

With tech valuations stretched and the AI narrative under scrutiny, Broadcom's results could either validate the infrastructure thesis or trigger broader sector rotation.

RISK DISCLOSURE

Earnings announcements create significant volatility. Consider position sizing and risk tolerance before trading. This analysis is for informational purposes and not investment advice.