Broadcom Earnings Preview: AI Backlog, TPU Demand, and Margins in Focus as Stock Tests Key Technical Levels

Broadcom is set to report first-quarter results after the close Wednesday, and investors are watching closely to see whether the semiconductor and infrastructure software giant can extend its streak of strong AI-driven growth. The report arrives at an important moment for the stock. Shares have pulled back sharply from the $410 level following the company’s last earnings release and are now attempting to stabilize just above the key $300 support area while straddling the 200-day moving average near $319. With sentiment toward AI infrastructure stocks becoming more volatile, the upcoming report could determine whether Broadcom breaks higher or continues consolidating.

Wall Street expects another strong quarter from the company. Consensus estimates call for adjusted earnings of roughly $2.02–$2.03 per share on revenue of about $19.2 billion, representing nearly 29% year-over-year revenue growth. That would mark a significant jump from the $1.60 per share and $14.9 billion in revenue Broadcom reported in the same quarter last year. Analysts also expect revenue growth to remain consistent with the momentum seen in the company’s most recent quarter.

The key growth driver remains Broadcom’s semiconductor business, particularly its exposure to artificial intelligence infrastructure. Analysts estimate that semiconductor solutions revenue will reach roughly $12.4 billion, representing a 51% year-over-year increase. Infrastructure software revenue—largely driven by the VMware acquisition—is expected to come in around $6.9–$7.0 billion, representing modest growth of roughly 4% year over year.

These estimates align closely with management’s own guidance from the previous quarter. Broadcom projected fiscal Q1 revenue of approximately $19.1 billion, implying about 28% year-over-year growth, while guiding to adjusted EBITDA margins around 67%. Within that outlook, the company expects semiconductor revenue of roughly $12.3 billion, with AI semiconductor revenue alone projected at $8.2 billion, representing roughly 100% year-over-year growth.

Investors will also be watching whether growth is accelerating or slowing relative to the company’s recent performance. In Broadcom’s fiscal fourth quarter, the company delivered revenue of $18.0 billion, up 28% year over year, while adjusted earnings climbed even faster, reflecting strong operating leverage. For the full fiscal year, revenue reached $63.9 billion, up 24%, driven largely by AI semiconductor demand and strong adoption of VMware software products.

AI demand remains the central theme surrounding Broadcom’s story. The company reported $20 billion in AI-related revenue in fiscal 2025, representing 65% growth year over year, and the momentum appears to be accelerating. Management previously disclosed an AI backlog exceeding $73 billion, with the majority expected to be delivered over the next 18 months. Analysts say that figure may continue to grow as hyperscalers expand their infrastructure spending.

Several recent developments reinforce the bullish outlook. Hyperscale customers including Alphabet and Meta have raised their long-term capital expenditure plans, while companies like Anthropic have placed massive orders for AI infrastructure. Broadcom executives recently disclosed that Anthropic placed an additional $11 billion order for delivery in 2026, highlighting the scale of demand for custom AI chips and networking components.

Much of that demand centers on Broadcom’s custom accelerator chips, often referred to as AI ASICs, which are designed for hyperscale customers building proprietary AI systems. Analysts at Susquehanna expect both custom ASICs and AI networking products to drive upside in the upcoming report. Broadcom’s Tomahawk-6 networking switch, which enables extremely high bandwidth within AI data centers, is reportedly booking at record levels, while optical components and PCIe switches are also seeing strong order demand.

However, not all analysts are entirely bullish. Some firms believe competition could increase over time as hyperscale companies develop more of their own chip technology internally. One firm recently initiated coverage with a neutral rating, suggesting that while Broadcom plays a critical role in custom AI chips, the largest customers may eventually internalize more of the technology stack.

Margins will be another critical focus during the earnings call. Broadcom’s gross margin has historically been among the strongest in the semiconductor industry, but management previously warned that margins could dip modestly as AI system revenue grows. AI hardware tends to carry slightly lower margins than the company’s legacy semiconductor products, though management argues that operating leverage from rising revenue should offset the pressure.

Some analysts expect semiconductor gross margins to gradually settle near 65% over the next several years, down from roughly 68% previously, as system-level AI products become a larger portion of the business mix. Investors will likely listen carefully for commentary on whether that trend is stabilizing or worsening.

The company’s infrastructure software business—primarily VMware—will also be under scrutiny. While the segment has provided steady cash flow and recurring revenue, analysts have raised concerns about potential customer churn as three-year VMware contracts eventually come up for renewal. Others have warned that the broader software sector sell-off could weigh on Broadcom’s valuation multiple.

Valuation remains an interesting debate for the stock. Broadcom currently trades at roughly 26–27 times forward earnings, slightly above Nvidia’s roughly 21x multiple and roughly in line with AMD’s valuation. Bulls argue the company deserves a premium due to its strong free cash flow and diversified revenue streams across semiconductors and enterprise software. Others believe concerns around margins and hyperscaler competition justify the recent compression in the stock’s multiple.

Peers will also provide important context for Broadcom’s results. Nvidia recently delivered another strong quarter but saw its stock decline afterward, highlighting the increasingly high expectations for AI infrastructure companies. AMD and other semiconductor firms have also experienced volatile reactions despite solid earnings growth, suggesting Broadcom could face a similar dynamic.

Options markets reflect that uncertainty. Traders are currently pricing in roughly an 8% move in either direction following the earnings release. That would imply a potential upside move toward $339 or a decline toward roughly $289 if the results disappoint.

For bullish investors, a breakout likely requires two things: a clear beat on revenue and earnings along with strong forward guidance tied to AI demand. Confirmation that the company’s AI backlog continues expanding—or that additional hyperscale customers are committing to long-term chip programs—could provide the catalyst needed to push the stock decisively above the 200-day moving average.

On the other hand, weaker guidance or signs of slowing AI orders could keep the stock trapped in its current consolidation range. After a massive rally driven by AI enthusiasm over the past year, expectations remain extremely high.

Broadcom’s report will ultimately test whether the AI infrastructure boom continues to justify those expectations—or whether investors are beginning to demand even stronger evidence of long-term growth before pushing the stock higher.