Chip developer Broadcom Inc., with deep roots in Irvine, has been on a roll since April as its share price more than doubled and its market cap neared $2 trillion.
Then on Dec. 11, the Palo Alto-based company reported fourth quarter sales that hit a record of $18 billion and adjusted profit that jumped 34% to $12.2 billion. It forecast fiscal first-quarter sales would climb 28% to $19.1 billion. It boosted its quarterly dividend by 10% to 65 cents a share.
“2025 was another strong year for Broadcom, and we see the spending momentum by our customers for AI continuing to accelerate in 2026,” Chief Executive Hock Tan told analysts on a conference call.
Wall Street wasn’t impressed, at least not at first. The shares in the subsequent two trading sessions fell by about 18% to $339.81 and a $1.6 trillion market cap (Nasdaq: AVGO). The reasons may involve traders’ disappointment that the fourth-quarter results weren’t stronger, and that gross margins are expected to decline because of its booming AI segment.
Harsh Kumar, senior research analyst at Piper Sandler & Co., was upbeat about Broadcom in a note to clients dated Dec. 11, the day the results were released.
“AVGO continues to be on a roll, delivering blockbuster results and guide,” Kumar wrote, referring to the company by its stock ticker symbol. “In addition to beating expectations, Broadcom is seeing sizable growth in its AI business.”
Chairman Henry Samueli
Palo Alto-based Broadcom spent more than two decades in Irvine before decamping and eventually settling in Silicon Valley in 2018. Company co-founder and chairman Henry Samueli is a major OC philanthropist and real estate tycoon.
Broadcom still maintains a large presence in Irvine. It easily retained its No. 1 spot on this year’s Business Journal list of largest semiconductor firms by headcount, keeping its local number at 1,300. Its workforce in Irvine includes software managers and semiconductor engineers.
Its stock has risen more than 15-fold in the past five years as Wall Street is excited about it designing custom AI accelerator chips for companies such as Google, OpenAI and Meta, as well as other networking, storage and memory chips.
Broadcom is positioned to control up to 80% of the custom AI chip market known as tensor processing units, or TPUs, Daniel Newman, chief executive of Futurum analyst firm, told the Wall Street Journal last week.
Broadcom’s Tan confirmed to analysts that the company’s AI business has lower gross margins than other units and hence as it grows in importance, the companywide gross margin may come down.
“We expect operating leverage to benefit us at the operating margin level, even as gross margin will start to deteriorate,” the CEO said.
Broadcom reported an adjusted 78% gross margin in the fourth quarter.
For fiscal 2025, Broadcom’s sales climbed 24% to $63.9 billion, and its adjusted profit soared 35% to $43 billion. Its cash flow was $26.9 billion.
Analysts are expecting sales to accelerate this fiscal 2026 by 51% to $96.3 billion and another 33% in fiscal 2027 to $128 billion.
OC Chip Companies Feel Share Price Hit
While Broadcom is the largest chip company in Orange County, there are several other publicly listed, key players in the rapidly evolving market that is being spurred on by AI and smartphone uses..
At Apple supplier Skyworks Solutions, employees are being asked to “walk and chew gum’’ at the same time under recently named CEO Phil Brace.
Skyworks is the largest semiconductor company with headquarters in Orange County, and it plans to buy North Carolina-based Qorvo to boost its offerings. Skyworks’ shares have dropped some 25% over the past year (Nasdaq: SWKS).
Skyworks’ fourth-quarter revenue was $1.1 billion, topping analysts’ estimates, while adjusted diluted earnings per share were $1.76, also above expectations.
Automobile-focused Indie Semiconductor on Nov. 6 reported third-quarter revenue of $53.7 million, missing analysts’ estimates, while the net loss of 7 cents per share was wider than forecast. Shares in Aliso Viejo-based Indie are down about 5% since December 2024 (Nasdaq: INDI).
Shares in Irvine-based 5G chip company Mobix Labs closed at 39 cents apiece on Dec. 18, a steep drop from $2.17 a year earlier.
That same day Mobix Labs said it expects the 2025 fiscal year, which ended Sept. 30, to show a jump in revenue and a narrower operating loss, according to “selected preliminary, unaudited financial results.”
—Kevin Costelloe
