Broadcom Reports Q4 EPS Beat, AI Revenue Up 74%; 100% Q1 AI Guidance
Broadcom delivered $1.95 EPS in Q4, beating estimates by $0.08, and posted $18.02 billion in revenue, up 28.2% year-over-year on a 74% surge in AI semiconductor sales. Management guided Q1 AI semiconductor revenue of $8.2 billion, implying 100% year-over-year growth, while the stock trades at a 73.3× P/E.
1. Encompass More Asset Management Significantly Reduces Broadcom Stake
In its latest SEC filing, Encompass More Asset Management disclosed an 82.3% reduction in its Broadcom position during the third quarter, selling 3,633 shares and retaining just 783 shares valued at approximately $258,000. This dramatic cut contrasts with smaller moves by peers such as Sawyer & Company, which increased its stake by 62.1%, and several other institutions initiating new positions ranging from $26,000 to $31,000. Institutional ownership in Broadcom remains high at 76.43%, underscoring ongoing confidence among large investors despite the recent divestiture by Encompass More.
2. Broadcom Reports Robust Q4 Results and Raises Dividend
Broadcom’s fiscal fourth quarter delivered $18.02 billion in revenue, surpassing consensus estimates by about $560 million and marking a 28.2% year-over-year increase. The company reported adjusted EPS of $1.95, beating forecasts by $0.08, and achieved a net margin of 36.2% and ROE of 37.45%. On the back of strong cash flow, the board approved a quarterly dividend of $0.65 per share, up from $0.59, translating to a $2.60 annualized payout and a payout ratio of 54.6%.
3. AI Semiconductor Revenue Accelerates, Guided to Double-Digit Growth
Broadcom’s AI semiconductor segment grew 74% in Q4 to $6.5 billion, outpacing the 63% growth of the prior quarter. Management guided first-quarter AI revenue to approximately $8.2 billion, implying 100% year-over-year expansion, driven by custom ASIC orders from hyperscale customers and surging demand for high-speed Ethernet and data center networking solutions. This momentum supports the company’s long-term target of maintaining above-market growth in the AI infrastructure market.
4. Insider Sales and Analyst Outlook Remain Positive
In December filings, CFO Kirsten Spears sold 3,714 shares at an average price near recent trading levels, trimming her stake by 1.19%, while CEO Hock Tan sold 130,000 shares, reducing his holdings by nearly 18%. Despite these transactions, three analysts upgraded or reaffirmed buy ratings in the past month, with consensus target prices lifted to a new average around $436. Analysts highlight Broadcom’s leadership in custom AI accelerators and networking chips, forecasting earnings growth above 30% annually over the next three years.