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Global semiconductor and infrastructure software product developer Broadcom Inc (ticker: AVGO) has seen a slight upswing after a soft CPI release for the month of November 2025 mildly boosted the market. However, the drop experienced in the stock since the earnings report for the full Fiscal Year (FY) 2025 ended November 2 that was released on the 11th of December – despite promising trends – might have much deeper factors embedded that might not be negated by mere macroeconomic indications.
Trend AnalysisBroadcom’s sales are broadly classified by “type” as sales of “products” and “subscriptions and services” which is delineated thus: when “product” sales are recognized as such, control of the software/service is transferred to the customer. When sales are classified by “segment”, the company reports:
“semiconductor solutions”, which includes semiconductor-based product lines and intellectual property (“IP”) licensing;
“infrastructure software”, which includes solutions for private cloud, mainframe software, cybersecurity, enterprise software, and so forth.
Given the datacenter boom in the wake of the AI Hype, it stands to reason that the latter might be of interest for AI-focused investors, which is amply seen in FY trends:
Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
Source: Company Information; Leverage Shares analysis
In FY 2024, a massive surge in sales of subscriptions and services is seen almost exactly aligned with that seen in infrastructure solutions – which also led to a massive rise in associated costs and impacted positive net income trends seen in previous FYs. In previous FYs, the sale of semiconductor solutions – in line with increasing investments in advancing chip designs – had helped maintain net income growth.
In FY 2025, however, the surge in infrastructure solutions has been more modest. Cost of sales for subscriptions and services has subsided, leading to a substantial improvement in net income passthroughs from the previous FY. Also helping this was a downtrend of expenditure on research and development (R&D) expenses.
In overall revenue, infrastructure software is on the cusp of being almost as important as semiconductor solutions:
Source: Company Information; Leverage Shares analysis
Therefore, the flagging of growth in a segment that is almost directly related to datacenters in the midst of massive buildouts being announced across the U.S. and Europe was a possible factor behind the downturn in investor sentiment immediately after the earnings release.
The Way AheadIn terms of business, the company has had a return to form with the return of positive net income growth that it had enjoyed across several years prior to FY 2024. However, investors deep in the zeitgeist of the AI Hype had been keen on explosive growth, which FY 2025’s top-line revenue numbers don’t quite suggest.
Through 2025, Broadcom has also been exploring what practically every major AI-relevant company has been doing throughout the AI Hype: making deals. In October, the company announced a strategic collaboration1 with OpenAI to deploy 10 gigawatts of OpenAI-designed custom AI accelerators, which will see OpenAI designing its own chips and system with Broadcom’s services and IP for its facilities and partner datacenters. Racks of Broadcom-developed AI accelerator and network systems are slated to be deployed from the second half of 2026 through 2029.
While deals such as this have had a contributory effect on the buildup of the highs seen in AI-relevant stocks, this conviction – at least in terms of total size and fiscal feasibility – is facing increasing scrutiny2 over the recent earnings season and thereafter. As a result, some of the substantial overvaluation seen in AI-relevant stocks relative to other stocks has been paring down and is likely continue into the next few months.
In the face of the November CPI print, the Bank of Japan’s continuing move to hike rates is also expected to have the opposite impact on major tech stocks: as the “yen carry trade” continues to narrow, at least some of the flows propping up these tech stocks are expected to slow down. Therefore – in the macroeconomic sense –uncertainty over the valuation that Broadcom holds is likely to continue.
Professional investors in Europe might like to consider the +3X Long Broadcom ETP (AVG3) and the -3x Short Broadcom ETP (AVOS) during bullish and bearish trends in the stock. For a broader yet leveraged exposure, the +4X Long Semiconductors ETP (SOXL) and the -4X Short Semiconductors ETP (SOXS) are at hand.
Furthermore, the Broadcom Options ETP (LSE ticker: AVGY) seeks to generate monthly income by buying NVIDIA shares and selling put options on them.
Footnotes:
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