Why Broadcom Stock Is Plummeting Today
Key Points
Broadcom stock is sinking even though the company posted better-than-expected quarterly results yesterday.
Broadcom also issued sales guidance that topped Wall Street's expectations.
Investors are selling the stock because Broadcom says that increased sales connected to AI products will lead to lower gross margins.
- 10 stocks we like better than Broadcom ›
Broadcom (NASDAQ: AVGO) stock is falling rapidly in Friday's daily trading session. The company's share price was down 11.7% as of 3 p.m. ET.
After yesterday's market close, Broadcom published results for the fourth quarter of its last fiscal year -- a period that ended Nov. 2. The company posted sales and earnings for the period that topped Wall Street's expectations, but bearish momentum is surging in response to other performance indicators.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Broadcom's quarterly beats weren't enough for investors
Broadcom posted non-GAAP (adjusted) earnings per share of $1.95 on revenue of $18.02 billion in the first quarter. The performance came in meaningfully ahead of the average analyst estimate, which had called for adjusted earnings per share of $1.89 on revenue of $17.46 billion.
Broadcom's revenue surged roughly 28% higher in fiscal Q4 and was boosted by strong demand for products used for artificial intelligence (AI) infrastructure. AI category revenue was up 65% year over year to reach $20 billion, and the company also announced that it was raising its quarterly dividend to $0.65 per share -- representing growth of 10%.
Broadcom is sinking despite a sales guidance beat for fiscal Q1
In addition to performance beats in Q4, Broadcom's guidance for sales of $19.1 billion in the current quarter also topped the average analyst estimate's call for sales of $18.31 billion in the period. Despite the strong sales outlook, investors have been dumping the stock in response to guidance suggesting that the business could face margin pressure.
Management said it was anticipating the company's gross margin to fall roughly 100 basis points on a sequential quarterly basis. Even more concerning, the team attributed the decline to a higher mix of AI revenue. Investors had been modeling for higher revenue to mean higher gross margins, and they're selling the stock in response to news that likely won't be the case.
Should you invest $1,000 in Broadcom right now?
Before you buy stock in Broadcom, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $507,421!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,109,138!*
Now, it’s worth noting Stock Advisor’s total average return is 972% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of December 8, 2025
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Recommended Articles
