Broadcom’s Pivotal Week: High Stakes Ahead of Earnings

As Broadcom prepares to release its quarterly results on December 11th, the market is abuzz with a potent mix of bullish analyst projections and swirling rumors of a landmark deal. The semiconductor and software giant finds itself at a critical juncture, with soaring expectations for its artificial intelligence hardware business juxtaposed against emerging legal challenges in its software division.

Market sentiment received a significant boost when Susquehanna Financial Group revised its outlook on Thursday, elevating its price target for Broadcom from $400 to $450. Analyst Christopher Rolland cited the accelerating production volume of Google's TPUv7 and heightened demand for AI networking solutions as primary catalysts for this upgraded assessment. Rolland further anticipates a substantial expansion of Broadcom's customer base for its custom AI chips (ASICs) in the latter half of 2026.

Even more compelling are widespread market reports pointing toward a potential strategic partnership with OpenAI. Industry observers suggest a framework agreement could involve up to 10 gigawatts of AI accelerator and networking infrastructure. Several financial analysts have estimated the total potential value of this collaboration could exceed $100 billion, with deliveries expected to scale massively between 2026 and 2029.

Legal Headwinds Emerge in Software Operations

However, this bright outlook is not without its clouds. The integration of recently acquired VMware is facing turbulence. Fidelity Investments, an asset manager overseeing $17.5 trillion, has reportedly initiated legal action. The core allegation is that Broadcom is refusing to renew existing VMware subscription agreements, instead compelling customers to migrate to more expensive bundled contracts under the threat of service disruption. This dispute highlights the tangible risks associated with the company's aggressive post-acquisition pricing strategy.

Should investors sell immediately? Or is it worth buying Broadcom?

Concurrently, Broadcom continues its internal restructuring efforts. The company is eliminating approximately 247 positions in sales and account management in Palo Alto, with these changes taking effect on December 19th. This move is part of a broader initiative to streamline operations and sharpen the corporate focus on high-margin AI partnerships.

Financial Performance and Market Positioning

Broadcom shares are currently trading at €327.35, hovering just below their 52-week peak. All attention is now fixed on the upcoming quarterly report this Wednesday. Consensus estimates project revenue of approximately $17.5 billion, which would represent a year-over-year increase of 24%.

The performance of the AI segment will be under particular scrutiny. Experts forecast AI-related revenue to reach $6.2 billion—a staggering 66% jump compared to the same period last year. Broadcom's entrenched position as a key supplier to hyperscalers like Google and Meta currently insulates it from the volatility affecting the broader semiconductor market.

The earnings call on December 11th will serve as a crucial test of whether the current market euphoria is justified. The forward guidance for AI revenue in 2026, coupled with management's response to the legal challenges from major clients like Fidelity, will be pivotal factors influencing the stock's trajectory in the coming months.