--- title: "AVGO vs. NVDA: Did the challenger blink first?" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/37081333.md" description: "In the early hours of Dec 12 Beijing time, AVGO released its FY2025 Q4 results after the U.S. close. The quarter ended Oct 2025.1) Overall performance: Revenue was $18.0bn, up 28.2% YoY. This beat the Street's $17.5bn.Revenue rose $2.0bn QoQ, driven by AI-related demand. AI remained the key driver.GPM was 68%. Excluding acquisition amortization and restructuring costs, adj. GPM was 76.6%, down 17bps QoQ..." datetime: "2025-12-12T01:43:41.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/37081333.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/37081333.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/37081333.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # AVGO vs. NVDA: Did the challenger blink first? Broadcom (AVGO) released its fiscal Q4 FY2025 results (quarter ended Oct 2025) after the U.S. close on Dec 12 Beijing time. **1\. Headline results**: **Revenue was $18.0bn (+28.2% YoY), beating estimates ($17.5bn)**. QoQ revenue rose by $2.0bn, driven mainly by AI.Gross margin was 68%. **Ex amortization and restructuring, underlying GPM was 76.6%, down 17bps QoQ**, as lower-margin custom ASICs grew as a mix. **2\. Semiconductor segment**: **Revenue was $11.07bn, up $1.9bn QoQ**, with AI the primary incremental driver. Details: **① AI**: **$6.5bn, +$1.3bn QoQ, above the $6.2bn market view**. AI revenue is concentrated in three customers (Google, Meta, and ByteDance), with the QoQ lift largely from higher shipments of Google's TPU v6.**Post Q3, Google and Meta raised capex again, suggesting further AI acceleration**. $Broadcom(AVGO.US) **guides Q1 AI revenue to $8.2bn, implying +$1.7bn QoQ**. **② Non-AI**: **$4.6bn, +1.3% YoY, broadly stable**. Broadband saw a steady recovery and wireless was flat, while other end-markets declined amid muted enterprise spending recovery. **3\. Infrastructure software**: Revenue was $6.94bn (+19% YoY), mainly from VMware integration and pricing model changes (shifting from perpetual licenses to subscriptions). **Going forward, software growth will be driven by VMware's subscription-led organic expansion, while M&A-driven high growth has faded**. **4\. Opex**: Core opex (R&D + S&M) was $4.09bn, roughly flat QoQ. With scale benefits, the core opex ratio fell to ~22.7%.Stock-based comp has risen meaningfully over the past two years and now makes up nearly half. Ex SBC, core opex was $2.13bn, up $80mn QoQ. **5\. VMware integration progress**: Dolphin Research tracks leverage via Total Debt/LTM Adj. EBITDA, which fell further to 2.1 this quarter. This has returned to pre-acquisition levels, indicating the VMware deal impact on leverage has been largely absorbed within two years. **6\. Guidance**: **Q1 FY2026 revenue is guided to ~$19.1bn vs. the Street at $18.5bn, with Adj. EBITDA margin of 67%**. AI revenue is expected to rise to $8.2bn. **Dolphin Research take: Beat on prints, but AI orders douse sentiment** Revenue and margins met or topped market expectations, with the topline strength **driven by AI**. **Ex amortization and restructuring, underlying GPM was 76.6%**, down slightly QoQ on a higher mix of lower-margin ASICs. **Leverage (Total Debt/LTM Adj. EBITDA) fell to 2.1, back to pre-deal levels**, suggesting the VMware impact has been largely digested within two years. **With VMware digestion largely complete, investors are refocusing on AVGO's AI trajectory:** **a) Hyperscaler capex, especially Google**: Hyperscalers are the ultimate buyers of AVGO's custom AI ASICs, so their capex directly shapes AI expectations.**Dolphin Research expects combined capex at the Big Four hyperscalers (Google, Meta, Microsoft, Amazon) to approach ~$600bn in 2026 (+40% YoY)**, underpinning AI chip demand next year. **b) AI revenue and guide**: AI revenue was $6.5bn this quarter, +$1.3bn QoQ. **For next quarter, AVGO guides $8.2bn, +$1.7bn QoQ, above the $7.0–7.5bn market range**. **Google is the key AI customer, and AVGO's AI revenue moves closely with Google's capex**. After Q3, Google raised 2025 capex to $91–93bn (from $85bn), including sizable TPU demand. **For next year, the Street now expects $135–140bn, laying a foundation for AVGO's AI growth**. **c) Rising competitiveness of 'Google Gemini + Broadcom'**: On one hand, Google's mass-produced TPU v7 reportedly exceeds H200 on performance and approaches NVDA's B200 on some metrics. **On the other, Google's Gemini is competitive vs. GPT-based models**. This shifts the discussion from a pure compute arms race to ROI. **That challenges NVDA's dominance**. **AVGO holds roughly a 10% share in AI chips, and with TPU v7 scaling and better value-for-money, the market expects NVDA share erosion over time**. **d) Customer and order progress**: Three AI ASIC customers (Google, Meta, ByteDance) are in mass production and anchor AI revenue. **AVGO also disclosed a 4th customer, Anthropic, with AI orders exceeding $10bn, slated for delivery in Q3 next year**. In Oct, **OpenAI announced a plan with AVGO to deploy 10GW over 2026–2029**. If realized, Dolphin Research estimates $100–150bn potential revenue. **For now, management frames it as a framework agreement**.To date, **AVGO has five named customers driving next year's AI revenue. The 5th customer is expected to contribute ~$1bn in 2026**. **At a $1.92tn market cap, AVGO trades at roughly 38x PE on FY2026 core after-tax operating profit** (assumes +50% YoY revenue, 68.5% GPM, 8% tax). Versus peers, AVGO screens richer than NVDA (22x) and Marvell (30x), reflecting expectations that custom ASICs will take share from NVDA. **Shares cleared $350 after the Anthropic and OpenAI disclosures**. The subsequent rally through $400 was supported by hyperscaler capex hikes and Gemini's strong showing. **Overall, Dolphin Research believes the stock already prices in new customers/orders and higher hyperscaler capex**. The market looked for fresh customer/order disclosures or a green light for external TPU sales (with chatter that Meta may buy TPUs). **Instead, management cited a $73bn AI backlog to be delivered over the next six quarters, which cooled sentiment near term**. **Specifically, backing out Anthropic's prior $10bn, this quarter's additional $11bn (for delivery by end-2026), and the 5th customer's $1bn, leaves $51bn over six quarters**. That implies an average of ~$8.5bn per quarter from legacy customers like Google. With Q1 AI revenue already guided to $8.2bn, **it suggests minimal growth for the next five quarters**. **While conservative near-term order visibility may dent sentiment, Dolphin Research remains constructive mid to long term**. External customers should still have incentives to adopt Google's TPUs, easing compute supply constraints and improving pricing leverage vs. NVDA.**Given today's AI chip landscape, AVGO's value-for-money should support steady share gains**. Upside to AI outlook remains possible, while NVDA's high margins/share face pressure from the 'Gemini + Broadcom' combo. See below for Dolphin Research's detailed take on Broadcom (AVGO): **I. Broadcom business overview** Recent growth has come from AI and the VMware consolidation. Hence, custom AI ASICs and VMware pricing changes are in focus.**1) Semiconductor solutions**: Growth is led by AI demand from Google, Meta, and ByteDance, while non-AI remains subdued on downstream softness.**2) Infrastructure software**: VMware consolidation lifts software to nearly 40% of revenue. Pricing resets at VMware supported revenue, but that effect is fading. **II. Consolidated results: steady growth on AI** **2.1 Revenue** **Broadcom (AVGO) posted Q4 FY2025 revenue of $18.0bn (+28% YoY), above the $17.5bn consensus**. The YoY lift was driven by AI. **QoQ, revenue rose $2.0bn**. AI contributed $1.3bn, the largest driver, and software also improved QoQ. **2.2 Gross profit** **Gross profit was $12.25bn (+36% YoY)**. Reported GPM was 68%, up QoQ. **Ex amortization and restructuring, underlying GPM was 76.6%, down 17bps QoQ**, **as mix shifted toward lower-margin custom ASICs**. **2.3 Operating expenses** **Operating expenses were $4.74bn, down slightly QoQ**. Ex SBC, **core opex (R&D + S&M) was $2.13bn, up $80mn QoQ**. Post-VMware consolidation, opex optimization is largely complete. **2.4 Profit** **Net income was $8.52bn**. Versus net income, **Dolphin Research prefers core operating profit (= GP - R&D - S&M) as a truer gauge**. AVGO delivered $9.7bn, up $1.6bn QoQ, mainly on AI expansion. **2.5 EBITDA** As an active acquirer, AVGO tracks Adj. EBITDA%. **Dolphin Research estimates Q4 FY2025 Adj. EBITDA% at 67.8%, above the 67% guide**. On leverage, **Total Debt/LTM Adj. EBITDA fell to 2.1**. With AI growth driving EBITDA higher, the ratio is back to pre-VMware levels, implying the deal has been digested in two years and M&A could re-enter the playbook. **III. Segment details: faster AI QoQ, VMware digestion done** AVGO operates in Semiconductor Solutions and Infrastructure Software. With VMware consolidated, software now accounts for roughly 40% of revenue.Within these, **1) Semiconductor**: networking, wireless, storage connectivity, broadband, industrial & other. **2) Infrastructure software**: VMware, CA, Symantec, Brocade, etc. **3.1 Semiconductor solutions** **Q4 FY2025 semiconductor revenue was $11.07bn (+34.5% YoY)**. Growth was led by AI, with non-AI largely stable. **1) AI** **AI remains the core growth engine**. AI revenue was $6.5bn, +$1.3bn QoQ, with growth re-accelerating. **Current AI revenue comes from Google, Meta, and ByteDance**. With hyperscalers lifting capex, AVGO expects Q1 AI revenue of $8.2bn, up $1.7bn QoQ. **AVGO's ASIC roster includes five disclosed customers: Google, Meta, ByteDance, Anthropic, and a 5th customer (~$1bn)**, all set to contribute next year. As for OpenAI's 10GW plan with AVGO, while it could translate into $100–150bn of revenue, it currently appears to be a framework agreement. Near term, watch the production ramps of Google's TPU v6 and v7. **Anthropic and the 5th customer's ~$1bn will start shipping in H2 next year**, implying a 'low-then-high' pattern for AI in FY2026. **Management also cited a $73bn AI backlog to be delivered over the next six quarters**, which cooled sentiment in the short term. **Backing out Anthropic's prior $10bn, this quarter's additional $11bn (for delivery by end-2026), and the 5th customer's $1bn leaves ~$51bn over six quarters**. That equates to ~$8.5bn per quarter for legacy customers like Google. With Q1 AI guided to $8.2bn, **it implies little growth in the subsequent five quarters**. Medium to long term, **Dolphin Research believes external customers have incentives to adopt Google's TPUs**, addressing compute shortages and improving bargaining power vs. NVDA. With a strong value-for-money proposition, AVGO can keep gaining share, and could lift its AI outlook over time. **Broader TPU shipments would further strengthen AVGO's AI position and erode NVDA's share**. **2) Non-AI** **Non-AI semiconductor revenue was $4.6bn (+1.3% YoY)**, stable overall. Non-AI spans enterprise storage, broadband, wireless, and industrial & other. Broadband recovered steadily and wireless was flat, while other end-markets fell amid a tentative enterprise recovery. **3.2 Infrastructure software** **Infrastructure software revenue was $6.94bn (+19% YoY)**, driven by VMware integration and the shift from perpetual to subscription. Software comprises VMware and the legacy CA, Symantec & Brocade stack. Legacy software has been steady at roughly $2.0bn per quarter, **so VMware is the swing factor**. **Dolphin Research sees two key VMware levers: financial digestion of the deal and the shift from perpetual to subscription**. Based on segment trends, we estimate VMware contributed roughly $4.7bn this quarter. Over 60% of former license users have moved to subscriptions. As penetration rises, software should still grow, but without the M&A-like surge. **With leverage down to 2.1, VMware has been largely absorbed**. AVGO no longer discloses VMware in detail, and AI is now the primary focus. \ Related coverage by Dolphin Research on Broadcom (AVGO): Earnings calls/notes: Sep 5, 2025 Trans: [博通（纪要）：AI 收入增速在下个财年将超 60%](https://longportapp.cn/zh-CN/topics/33658831) Sep 5, 2025 First Take: [英伟达、AMD 寡淡？博通霸气接棒 AI 扛旗手](https://longportapp.cn/zh-CN/topics/33654872) Jun 6, 2025 Trans: [博通（纪要）：2026 年 AI 收入将延续 60% 的增速](https://longportapp.cn/zh-CN/topics/30421923) Jun 6, 2025 First Take: [博通：ASIC 增速 “失灵”，万亿 ASIC 故事遇 “坑” or 迎 “机”？](https://longportapp.cn/zh-CN/topics/30413673) Mar 7, 2025 Trans: [博通（纪要）：ASIC 客户加 2 变 “3+4”，暂不考虑并购](https://longportapp.cn/zh-CN/topics/27896151) Mar 7, 2025 First Take: [Marvell 塌方、英伟达蛰伏？博通来当定海神针了](https://longportapp.cn/zh-CN/topics/27895695) Dec 13, 2024 Trans: [博通：2027 财年 AI 可服务市场规模将达到 600-900 亿（FY24Q4 纪要）](https://longportapp.cn/zh-CN/topics/26053649) Dec 13, 2024 First Take: [ASIC 要超 GPU？博通的好日子在后头](https://longportapp.cn/zh-CN/topics/26052530) Sep 6, 2024 Trans: [博通：ASIC 的需求在 2025 年将会更多（FY24Q3 电话会）](https://longportapp.cn/zh-CN/topics/23690461) Sep 6, 2024 First Take: [博通 “狂飙”？AI 撑不起塌方的传统半导体](https://longportapp.cn/zh-CN/topics/23689547) Deep-dive: Dec 4, 2024 Company Deep-Dive: [博通（AVGO.O）：软硬双吃，AI 算力时代的另类赢家](https://longportapp.cn/topics/25867518) Sep 13, 2024 Company Deep-Dive: [博通：“买买买” 铺就 “万亿” 路？ 腾讯阿里学起来！](https://longportapp.cn/topics/23851474) Risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosures](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [AVGO.US](https://longbridge.com/en/quote/AVGO.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [NVDL.US](https://longbridge.com/en/quote/NVDL.US.md) - [07788.HK](https://longbridge.com/en/quote/07788.HK.md) - [07388.HK](https://longbridge.com/en/quote/07388.HK.md) - [NVDY.US](https://longbridge.com/en/quote/NVDY.US.md) - [NVDD.US](https://longbridge.com/en/quote/NVDD.US.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**