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Deep Dive
Seemingly every investor knows about Nvidia and its near-$5 trillion market cap. But many are not as familiar with Broadcom, even though it commands a $1.9 trillion market cap, making it the seventh-largest US public firm. So what does AVGO do?
Broadcom is a technology company that designs and supplies semiconductors and infrastructure software used across data centers, networking, smartphones, storage, and more. Its products help power everything from enterprise servers and wireless devices to factory automation, energy systems and electronic displays.
The company has also become a key AI and infrastructure player through major recent deals, including its $61 billion acquisition of VMware, a multi-year OpenAI partnership to deploy 10 gigawatts of custom AI accelerators and networking systems, and a more than $30 billion Apple chip-supply agreement running through 2031.
Broadcom has steadily grown revenue, operating profit, and free cash flow over the past several years. However, it’s the expectations for fiscal 2026 and 2027 that really stand out.
Future Growth Projections
Broadcom’s fiscal year ends in October, meaning the company will move into fiscal 2027 in just a few months. Over the past six months, forward earnings estimates have been revised higher by more than 13%, reflecting growing confidence in the company’s growth outlook.
According to Bloomberg, analysts project the following:
- Earnings Growth: 70% in 2026, 66% in 2027, and 33.6% in 2028
- Revenue Growth: 65.6% in 2026, 63.8% in 2027, and 30.8% in 2028
Analysts currently have a consensus price target of ~$510 on AVGO stock, implying about 27% upside to today’s stock price.
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Diving Deeper — Valuation
Before the AI-fueled surge of the last few years, Broadcom rarely traded above 20 times forward earnings. More recently though, the stock has tended to find valuation support around 23 times forward earnings, while facing resistance when its multiple approaches or exceeds 35 times.
Risks
While AVGO is viewed as a major AI infrastructure beneficiary, it may not always rally alongside the broader AI trade — case in point, the SMH ETF gained 71% last quarter, while AVGO rose “just” 22%, despite Broadcom being a top-five holding in the ETF. Other risks include AI-related growth disappointing, semiconductor/tech volatility weighing on investor appetite, or the market assigning AVGO a lower valuation multiple.
The Bottom Line
After a roughly 20% pullback from recent highs, AVGO may have bulls taking a closer look. That’s particularly true given expectations for strong revenue and earnings growth, healthy margins, and a valuation that is currently near the lower end of its recent range.
At the same time, skeptical investors may prefer to stay on the sidelines. The stock still carries elevated expectations, and any disappointment around AI growth, VMware execution, or broader semiconductor demand could weigh on sentiment. Recent underperformance among mega-cap semi names like AVGO and NVDA versus smaller memory and chipmakers may also leave some investors waiting for clearer momentum before stepping in.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.