Analyst(s): Futurum Research
Publication Date: December 15, 2025
Broadcom’s quarter was propelled by accelerating AI semiconductor demand and continued adoption of VMware Cloud Foundation, with strong bookings expanding backlog. The company’s shift toward system-level AI deliveries and investments in advanced packaging underpins execution at scale in FY 2026.
What is Covered in this Article:
- Broadcom’s Q4 FY 2025 financial results
- System-scale AI accelerators and XPUs
- AI networking backlog and switching momentum
- VMware Cloud Foundation Momentum
- Guidance and Final Thoughts
The News: Broadcom Inc. (Nasdaq: AVGO) reported Q4 FY 2025 results with revenue of $18.0 billion, up 28% year-on-year (YoY), exceeding Wall Street consensus of $17.5 billion. Semiconductor solutions revenue was $11.1 billion, up 35% YoY, and infrastructure software revenue was $6.9 billion, up 19% YoY. Non-GAAP operating income was $11.9 billion, up 35% YoY, with a non-GAAP operating margin of 66.2% versus 62.7% in the prior year. Non-GAAP net income was $9.7 billion, up 39% YoY. Non-GAAP diluted EPS was $1.95, up 37% YoY.
“We see the momentum continuing in Q1 and expect AI semiconductor revenue to double YoY to $8.2 billion, driven by custom AI accelerators and Ethernet AI switches,” said Hock Tan, President and CEO of Broadcom Inc. “We forecast Q1 FY 2026 total revenue of $19.1 billion and adjusted EBITDA of 67%.”
Broadcom Q4 FY 2025 Earnings: AI And Software Drive Beat
Analyst Take: Broadcom’s results highlight a pivot to system-scale AI delivery while maintaining software subscription durability through VMware Cloud Foundation. Custom XPU programs expanded with multi-billion-dollar orders, and AI networking demand accelerated ahead of accelerator deployments, building multi-quarter visibility. Software bookings and backlog increased as Broadcom completed VMware integration and focused on standardized offers tied to VCF. Management flagged near-term gross margin dilution from AI mix and initial system sales, but offset by operating leverage and scale. Investments in advanced packaging and supply chain capacity underpin execution against a growing AI and software backlog.
System-Scale AI Accelerators And Custom XPUs
Management emphasized a system-delivery model for hyperscaler AI, with custom accelerators (XPUs) more than doubling YoY and AI semiconductor revenue of $6.5 billion, up 74% YoY. Broadcom cited a $10 billion TPU rack order announced in Q3 FY 2025 and an additional $11 billion follow-on order in Q4, both for delivery into late 2026. The company also added a fifth XPU customer via a $1.0 billion order, expanding its custom silicon footprint across major AI platforms. Executives described growing use of XPUs for both training and inference, including external monetization of TPU capacity by hyperscalers. The shift to certified system sales consolidates Broadcom content across accelerators, networking, optics, and interconnects, aligning with customer preferences for turnkey deployments. This system-led approach supports broader share capture per rack and deeper account entrenchment.
AI Networking, Switching, And Backlog Visibility
AI networking demand outpaced accelerator deployments as customers built core data center fabrics ahead of cluster rollouts. Broadcom’s Tomahawk 6 switch at 102 terabits per second continued to book at a record rate, with AI switch backlog exceeding $10.0 billion. The company also reported strong orders for DSPs, lasers, and PCI Express switches, reflecting full-stack networking demand. Total AI order backlog reached $73.0 billion across XPUs and networking components, with deliveries expected over the next 18 months. Management guided Q1 FY 2026 AI semiconductor revenue of $8.2 billion, approximately doubling YoY, reinforcing near-term trajectory. This breadth of AI networking and accelerator demand provides multi-quarter revenue visibility and supports capacity planning.
VMware Cloud Foundation Momentum And Software Economics
Infrastructure software revenue was $6.9 billion in Q4 FY 2025, up 19% YoY, driven by VMware Cloud Foundation (VCF) adoption. Bookings exceeded $10.4 billion versus $8.2 billion a year ago, expanding revenue visibility. Software gross margin reached 93% and operating margin improved to 78% (up from 72% a year ago), reflecting VMware integration progress. Management continues to expect low double-digit growth for infrastructure software in FY 2026, with renewals seasonal in Q1. This performance profile supports durable, high-margin cash flows to fund accelerated AI investments across silicon and packaging. Overall, VCF momentum and backlog growth provide a stable, high-margin base.
Guidance And Final Thoughts
For Q1 FY 2026, Broadcom guided consolidated revenue of approximately $19.1 billion, up 28% YoY, with adjusted EBITDA at 67% of revenue. Segment outlook includes semiconductor revenue of approximately $12.3 billion, up 50% YoY, with AI semiconductor revenue of $8.2 billion, up roughly 100% YoY, and infrastructure software revenue of approximately $6.8 billion, up 2% YoY. Management expects consolidated gross margin to decline about 100 basis points sequentially on higher AI mix, while operating leverage continues to support margins. The non-GAAP tax rate is expected to be approximately 16.5% in FY 2026, given the global minimum tax and geographic mix. Near-term investments in advanced packaging (including Singapore) and secured foundry capacity aim to mitigate supply risk and sustain system-scale delivery.
See the full press release on Broadcom’s Q4 FY 2025 financial results on Broadcom’s website.
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