Why Is Wall Street Ignoring Broadcom’s Record Quarter and Dividend Hike? A Deep Dive Into the AI Chip Giant’s Market Paradox

• Broadcom’s Stellar Earnings: Why the Market Yawned
• The AI Backlog Brouhaha: $73B Isn’t Enough?
• Margin Squeeze: The Hidden Cost of AI Dominance
• Dividend Dynasty: The 10% Raise Everyone Overlooked
• What’s Next? Q1 Guidance vs. Street Expectations
• Analyst Takeaways: Knee-Jerk Reaction or Valid Concerns?
• FAQ: Your Broadcom Burning Questions Answered

Broadcom just posted a historic quarter—net profit up 97%, record revenue of $18B, and a 10% dividend boost. Yet, its stock plunged 10%. Why? Markets fretted over an AI backlog "only" hitting $73B (below some sky-high hopes) and margin pressures. But analysts argue the sell-off is overblown. We unpack the numbers, the AI Gold rush, and why this might be a buying opportunity.

Broadcom’s Stellar Earnings: Why the Market Yawned

On paper, Broadcom’s Q4 2025 (ended November) was a blowout:

• 💰 Net profit skyrocketed 97% YoY to $8.52B ($1.14/share)
• 🚀 Revenue hit $18.015B (+28%), crushing estimates of $17.47B
• 🤖 AI chip sales surged 74%, powering custom silicon for Google’s NVIDIA rivals

The AI Backlog Brouhaha: $73B Isn’t Enough?

CEO Hock Tan revealed a $73B AI order backlog (18-month pipeline). Sounds massive, but JPMorgan notes traders hoped for $80B+. "The market’s acting like this implies just $50B in 2026 revenue," shrugged one BTCC analyst. Bank of America called the reaction "myopic"—highlighting Broadcom’s lead in AI Ethernet switches and custom accelerators.

Margin Squeeze: The Hidden Cost of AI Dominance

CFO Kirsten Spears warned of a 100-basis-point gross margin dip next quarter (to ~76.9%). Why? AI chips are lower-margin than legacy products. But as BofA put it: "Would you rather have 80% margins on shrinking sales or 77% on explosive growth?"

Dividend Dynasty: The 10% Raise Everyone Overlooked

Amid the panic, Broadcom hiked its quarterly dividend to $0.65/share (+10%). "This isn’t some fly-by-night meme stock—it’s a cash cow with 13 straight years of dividend growth," noted TradingView data. Yet the yield (1.7%) got drowned out by AI drama.

What’s Next? Q1 Guidance vs. Street Expectations

Broadcom forecasts $19.1B Q1 revenue (vs. $18.48B consensus) with adjusted EBITDA margins at 67%. The kicker? AI semiconductor sales could double YoY to $8.2B. "We’re still in inning two of a nine-inning AI game," Tan quipped—a rare baseball metaphor from the usually reserved CEO.

Analyst Takeaways: Knee-Jerk Reaction or Valid Concerns?

FAQ: Your Broadcom Burning Questions Answered

Why did Broadcom stock drop despite good earnings?

Investors hyper-focused on the AI backlog ($73B vs. whispered $80B+) and margin guidance dip, ignoring the dividend hike and record profits.

Is Broadcom a good long-term AI play?

With custom chips for Google and AI Ethernet leadership, its tech is crucial—but competition from Nvidia and AMD is fierce.

How safe is the new $0.65 dividend?

Very. Payout ratio sits at just 45%, and free cash Flow grew 22% last quarter to $9.1B.