Next week, the "Google Chain Core" Broadcom earnings report is coming

Author: Ye Huiwen

Source: Hard AI

On December 4th, according to the latest research reports from Citigroup and Goldman Sachs, Broadcom is expected to achieve a strong performance of "beat and raise" in its fourth quarter of fiscal year 2025 (F4Q25) earnings report, which will be released after the market closes on December 11th. This is attributed to Google's opening of TPU usage to external customers and the strong growth in overall AI spending.

Explosive Growth in AI Revenue: Citigroup expects Broadcom's AI revenue for fiscal year 2026 (F26) to soar by 147% year-on-year, reaching an astonishing $49.3 billion. Goldman Sachs anticipates that this growth rate will exceed 100%.

Core Drivers Thriving: Google is expanding its TPU business to external customers, combined with the demand from OpenAI, Anthropic, and Meta, becoming the core engine driving expectations higher.

Bubble or Feast?: Citigroup bluntly stated that it feels like a "bubble" (OpenAI's capital expenditure will far exceed its revenue), but before the bubble bursts, semiconductor valuations still have room to rise as long as funds continue to chase AI.

Target Price Raised: Citigroup reiterated a buy rating with a target price of $415; Goldman Sachs raised its target price to $435.

Earnings Outlook: Wall Street Bets on "Exceeding Expectations" Becoming the Norm

For the upcoming earnings report on December 11th, institutional investors' appetites have been whetted, and this is not without reason.

Citigroup's research report clearly states, it expects Broadcom's F4Q25 revenue to reach $17.5 billion (a quarter-on-quarter increase of 9%), exceeding market consensus.

This is mainly due to the continuous rise in AI sales. On the profit side, Citigroup expects earnings per share (EPS, excluding stock-based compensation SBC) to be $1.96, also higher than the market's general expectation of $1.87. Notably, Broadcom has outperformed both the market and Citigroup's own expectations for the past four consecutive quarters.

More critically, the guidance is key. Citigroup expects Broadcom to provide revenue guidance for F1Q26 that exceeds market expectations, projected to reach $18 billion (market consensus is $18.4 billion; here Citigroup's forecast is slightly conservative but still optimistic about the upside potential brought by Google's volume), with a gross margin expected to remain at a high level of 76.0%.

Google's TPU Supply Opens a New Chapter, AI Revenue to Show Triple-Digit Growth

As a core player in the "Google chain," Broadcom's logic is undergoing a qualitative leap.

According to Citigroup's detailed breakdown, Broadcom's AI sales for fiscal year 2026 are expected to grow by 147% year-on-year, reaching approximately $49.3 billion, with the proportion of total revenue soaring from 31% in fiscal year 2025 to 53%.

The core driver of this growth comes from Google—Google not only uses TPU extensively in its own business but has also begun to extend TPU resources to external customers. Additionally, orders from Anthropic, Meta, and OpenAI are also key increments.

Goldman Sachs' data also corroborates this trend. Goldman Sachs expects Broadcom's AI revenue for fiscal year 2026 to be $45.4 billion (a year-on-year increase of 128%), and it will further grow to $77.3 billion in fiscal year 2027. Goldman Sachs specifically mentioned that investors should focus on positive data points following the release of Google's Gemini 3 and the scaled application of Broadcom's Tomahawk 6 chip in the field of network connectivity

Before the Bubble Bursts: OpenAI's Trillion-Dollar Capital Expenditure Frenzy

Citigroup's research report includes a thought-provoking perspective: "It feels like a bubble... but we don't know when it will burst."

Citigroup compares it to the internet bubble of the late 1990s. Currently, OpenAI has announced a total computing power capacity plan of 26 gigawatts. According to Citigroup's AI analysts, the cost per gigawatt is approximately $50 billion, which means that by 2030, OpenAI's cumulative capital expenditure alone could reach $1.3 trillion.

This figure far exceeds the expected revenue returns. Even assuming OpenAI's revenue grows 14 times to $163 billion by 2029, its expected capital expenditure for that year would still be as high as $700 billion (in contrast, the total capital expenditure of the four major cloud giants is expected to be $600 billion).

Although Citigroup believes that this "expenditure far exceeds revenue" model exhibits bubble characteristics, there is still room for semiconductor companies' valuations to continue rising before corporate demand for AI services slows or IPO financing capabilities are exhausted. The current strategy is: to continue going long before the bubble bursts.

In addition to the explosive growth of AI business, there is also good news from Broadcom's non-AI semiconductor business. This segment (accounting for 26% of F25E sales) has stabilized at around $4 billion after experiencing a decline of about 39% from its peak in January 2023 ($6.5 billion).

Citigroup points out that the recovery of non-AI business will help offset the gross margin dilution effect brought by the AI business (which focuses on large-scale customized chips, ASICs).

Valuation and Target Price: Just the Beginning

Based on extreme optimism about profitability over the next two years, both major banks have given positive target prices:

• Citigroup: Reiterates "Buy" rating, target price of $415. This is based on a 30 times price-to-earnings ratio of estimated earnings per share (excluding SBC) for fiscal year 2027. Citigroup's current F26 and F27 earnings per share expectations are approximately 10% higher than market consensus.
• Goldman Sachs: Raises target price from $380 to $435. Goldman Sachs also raised its earnings per share expectations for F26 and F27 (an average increase of 14%) and believes the market has not fully digested the expectation of AI revenue doubling in fiscal year 2026.

Next week's Broadcom earnings report is not just a summary of the past three months, but also a barometer of whether the AI capital expenditure feast will continue into 2026. As long as Google and OpenAI are still burning cash wildly, Broadcom is one of the biggest shovel sellers in this game