Broadcom (AVGO) Stock Dips 20% Despite $73B AI Backlog and Strong Demand

Broadcom (AVGO) shares have fallen 20% from their 52-week high of $414.61 as investors weigh near-term gross margin pressure against robust AI-driven demand. The company reported a consolidated AI backlog of over $73 billion—nearly half of its $162 billion total—with $8.2 billion in AI revenue projected for Q1 2026, doubling year-over-year. Management forecasts a 100-basis-point sequential decline in Q1 gross margins due to a higher mix of lower-margin AI semiconductor sales and third-party component pass-throughs in XPU systems. However, Broadcom expects gross margin dollars and operating profit to rise through scale and operating leverage. Infrastructure software remains strong, with Q4 revenue up 19% YOY to $6.9 billion and a software backlog of $73 billion. Wall Street maintains a consensus “Strong Buy” rating.