Key Stats for Broadcom Stock
- Price change for Broadcom stock in last 6 months: -5%
- $AVGO Stock Price as of Oct. 9: $362
- 52-Week High: $495
- $AVGO Stock Price Target: $531
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What Happened?
Broadcom (AVGO) CEO Hock Tan said on Monday that capital will be the biggest constraint as AI development continues. He spoke on a panel in Singapore, Reuters said.
Tan said the company is working through wafer and memory shortages, but money is the bigger problem.
He also pointed to two of Broadcom’s AI customers, Anthropic and OpenAI, which have shown they can earn significant revenue from their latest models.
Those models power AI personal assistants.
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What the Market Is Telling Us About Broadcom Stock
Why would capital be the main limit? The scale of the plans explains it.
On its September earnings call, Broadcom said it expects AI revenue of about $115 billion in fiscal 2027 and expects about $230 billion in fiscal 2028.
Customers need huge amounts of capital to build the data centers that use Broadcom’s chips. Tan has said that Anthropic and OpenAI are growing faster than their cash flow allows.
To help, Broadcom set up the AI XPV platform with Apollo and Blackstone. The first $35 billion tranche closed in June for Anthropic’s 1 gigawatt deployment.
Broadcom says outside financial partners underwrite the assets. It does not provide the financing itself and may offer modest residual value guarantees.
Management called those low risk. Broadcom stockholders should still watch this closely, since the company declined to say how large the exposure could get.
The latest results show why this matters.
- Q3 revenue was $29.6 billion, up 86%.
- AI semiconductor revenue rose 221% to $16.7 billion.
- Operating margin was a record 68%.
- Free cash flow hit a record $13.7 billion.
On the call, Tan said every gigawatt of compute could bring Anthropic and OpenAI about $30 billion of annual revenue.
That supports his view that funding these labs makes economic sense, and Monday’s comments support that point.
Gross margin is falling as chips with more memory make up more of sales.
Broadcom guided to about 73% next quarter. Management says operating margin matters, projected at 66%.
For now, Broadcom stock depends on whether customers can keep raising the money to buy what Broadcom plans to ship.
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So what is Broadcom stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
