On December 4, according to the latest research reports from Citi and Goldman Sachs, Broadcom is expected to deliver another strong "beat-and-raise" performance in its fiscal fourth-quarter 2025 (F4Q25) earnings report, scheduled for release after the market closes on December 11. This optimism stems from Alphabet's decision to open its TPU services to external customers and robust growth in overall AI spending.

**Explosive AI Revenue Growth**: Citi forecasts Broadcom's AI revenue for fiscal 2026 (F26) to surge 147% year-over-year to a staggering $49.3 billion, while Goldman Sachs expects growth exceeding 100%. **Core Drivers**: Alphabet's expansion of its TPU business to external clients, combined with demand from OpenAI, Anthropic, and Meta, serves as the primary engine behind these bullish projections. **Bubble or Boom?**: Citi acknowledges the scenario feels "bubble-like" (given OpenAI's capital expenditures far outpacing revenue), but semiconductor valuations could still rise as long as capital continues chasing AI. **Price Target Hikes**: Citi reiterates a "Buy" rating with a $415 target, while Goldman Sachs raises its target to $435.

**Earnings Preview: Wall Street Bets on Another Beat** Investors have high expectations for Broadcom's December 11 report, and for good reason. Citi projects F4Q25 revenue of $17.5 billion (up 9% sequentially), above consensus, driven by accelerating AI sales. Adjusted EPS (excluding stock-based compensation) is forecast at $1.96, also surpassing the $1.87 consensus. Notably, Broadcom has outperformed both market and Citi’s estimates for four consecutive quarters.

Guidance is key: Citi expects Broadcom to issue an F1Q26 revenue outlook above consensus at $18 billion (versus $18.4 billion consensus), with gross margins holding steady at 76.0%.

**Alphabet’s TPU Expansion Fuels Triple-Digit AI Growth** As a core beneficiary of Alphabet’s ecosystem, Broadcom’s growth trajectory is transforming. Citi estimates Broadcom’s fiscal 2026 AI revenue will jump 147% YoY to ~$49.3 billion, accounting for 53% of total sales (up from 31% in F25). Alphabet’s move to offer TPUs to external clients, alongside orders from Anthropic, Meta, and OpenAI, is the primary catalyst.

Goldman Sachs echoes this trend, projecting Broadcom’s F26 AI revenue at $45.4 billion (+128% YoY), rising to $77.3 billion in F27. The firm highlights Alphabet’s Gemini 3 launch and Broadcom’s Tomahawk 6 chip adoption as critical growth drivers.

**Pre-Bubble Burst: OpenAI’s Trillion-Dollar Capex Spree** Citi’s report includes a sobering observation: "This feels like a bubble... but we don’t know when it will pop." Drawing parallels to the late-90s dot-com bubble, Citi notes OpenAI’s planned 26-gigawatt compute capacity could imply cumulative capex of $1.3 trillion by 2030—far exceeding projected revenue. Even assuming OpenAI’s 2029 revenue grows 14-fold to $163 billion, its capex would still hit $700 billion that year (versus $600 billion for the top four cloud providers combined).

While unsustainable, Citi argues semiconductor valuations may keep climbing until AI demand slows or IPO funding dries up. The playbook? "Stay long until the bubble bursts."

**Non-AI Business Stabilizes** Broadcom’s non-AI semiconductor segment (26% of F25E sales), after a 39% decline from its January 2023 peak ($6.5 billion), has stabilized around $4 billion. Citi notes this recovery could help offset margin dilution from AI-focused ASIC chips.

**Valuation: Just the Beginning** Both banks raised targets on bullish earnings forecasts: - **Citi**: Maintains "Buy," $415 target (30x F27 EPS ex-SBC), with F26/F27 EPS estimates ~10% above consensus. - **Goldman Sachs**: Lifts target to $435 (from $380), citing 14% higher F26/F27 EPS estimates and underappreciated AI revenue doubling in F26.

Next week’s report isn’t just about past performance—it’s a litmus test for whether the AI capex frenzy led by Alphabet and OpenAI will continue. As long as these giants keep spending, Broadcom remains a top "picks-and-shovels" play.