Emmanouil Rafaletos @Manosrafas1: "$AVGO just reminded the..."

Greece

$AVGO (Broadcom Inc) just reminded the market of an important lesson: a great business can still be a tough stock in the short term. Despite posting another very strong earnings report, AVGO sold off ~11% after results, not because the fundamentals broke, but because expectations were extremely high going into the print. The numbers themselves were hard to fault. Q4 revenue grew 28% YoY to $18.0B, AI semiconductor revenue jumped 74% YoY, and adjusted EBITDA margins stayed near an elite 68%. Free cash flow reached $7.5B in the quarter and $26.9B for FY25, up 39% YoY. Management also guided Q1’26 revenue to ~$19.1B, again implying ~28% growth, and raised the quarterly dividend by 10% to $0.65. So why the selloff? In my view, this was about positioning and valuation, not execution. The stock had rallied hard into earnings on the AI narrative, and the market was effectively pricing in upside surprises well beyond already-strong guidance. When results were “excellent but not explosive,” investors took profits. That’s a classic setup for multiple compression, even when earnings keep growing. In my own portfolio, I still see $AVGO as a long-term compounder rather than a momentum trade. The combination of custom AI accelerators, Ethernet switching, and high-margin infrastructure software gives Broadcom a diversified way to monetize AI spend. However, after this run, I’m more selective: I’m holding existing exposure and would prefer to add on weakness rather than chase rebounds. Key risks remain. AI capex cycles can cool quickly, hyperscalers continue to push in-house silicon, and VMware integration still needs to prove durable software growth over time. If revenue growth slows even modestly, the stock may need more time to digest prior gains. For me, this is a case of great company, tougher stock setup, at least in the near term. I’ll be watching how valuation resets relative to cash flow over the next few quarters. If you appreciate this post, feel free to follow. $QQQ (Invesco QQQ) $NSDQ100 $VOO (Vanguard S&P 500 ETF) $VIG (Vanguard Dividend Appreciation ETF) $NVDA (NVIDIA Corporation) $TSM (Taiwan Semiconductor Manufacturing Co Ltd - ADR)