Key Stats for AVGO Stock
- Past week’s performance: 9.1%
- 52-week range: $282 to $495
- Valuation model target price: $520
- Implied upside: 21.5% over 2.2 years
Broadcom’s AI order book is running way ahead of shipments. See what that gap could mean for the stock’s fair value (It’s free) >>>
AI Chip Demand Keeps Outrunning Supply
Broadcom (AVGO) climbed roughly 9.1% this week as investors positioned ahead of the company’s fiscal Q3 report, due after market close on September 2. The setup looks strong, since Broadcom’s own executives have flagged demand that is far outpacing what the company can currently ship.
On the last earnings call, CEO Hock Tan said bookings for AI semiconductors topped $30 billion in the quarter, compared with just $10.8 billion actually shipped. Bookings represent orders customers have committed to but have not yet received, so a wide gap like this points to a large revenue runway still ahead.
Adding to the momentum, reports this week pointed to Samsung securing a large AI chip partnership with Broadcom, potentially worth hundreds of billions of dollars over time. Deals like this expand Broadcom’s custom silicon business, where it designs specialized AI chips for large customers instead of selling off-the-shelf processors.
Custom silicon, sometimes called ASICs, differs from general-purpose GPUs because it is built for one customer’s specific workload. That makes these contracts sticky once secured, since customers cannot easily switch suppliers.
Not everything is smooth, though. A European court this week allowed regulators to continue pursuing a request for Broadcom’s U.S. legal documents tied to a VMware antitrust investigation. If Broadcom stock keeps climbing into earnings, the EU dispute could become the swing factor investors watch most closely afterward.
Hock Tan reinforced the bullish setup on the last call, telling analysts that AI revenue visibility now extends further out than it ever has, thanks to multiyear commitments from hyperscale customers.
See analysts’ growth forecasts and price targets for AVGO (It’s free) >>>
Is Broadcom’s Multiple Still Reasonable?
Under valuation model assumptions realized through 10/31/28, the stock is modeled using:
- Revenue Growth (CAGR): 27.0%
- Operating Margins: 67.3%
- Exit P/E Multiple: 27.1x
Based on these inputs, the model estimates a target price of $520, implying 21.5% total upside and a 9.1% annualized return over the next 2.2 years.
A 9.1% annualized return sits just under the 10% bar that typically separates an attractive stock from an average one, so Broadcom lands in a middle zone rather than looking obviously cheap or expensive.
What stands out is the operating margin assumption of 67.3%, an extremely high figure that reflects Broadcom’s software-heavy mix following its VMware acquisition, combined with the high margins typical of custom chip design work. Few hardware companies operate anywhere close to that level.
Broadcom’s exit multiple of 27.1x sits below where high-growth AI names often trade, since the market already prices in some maturity given Broadcom’s scale. That leaves room for upside if AI bookings keep converting into shipped revenue faster than expected, but also leaves less cushion if hyperscaler capital spending slows.
See how faster AI chip conversion could change Broadcom’s target price (Free with TIKR) >>>
Custom Silicon Rivals Are Also Commanding Big Multiples
Broadcom’s clearest competitor in custom AI silicon is Marvell Technology (MRVL), which designs similar application-specific chips for data center customers. Marvell trades at roughly 46 times forward earnings, a steep premium to Broadcom’s 27.1x NTM P/E, even though both companies chase the same hyperscaler contracts.
That gap partly reflects size. Marvell is a smaller, faster-growing company, with analysts projecting revenue growth near 45% for the coming year, well above Broadcom’s own forward two-year revenue CAGR of 64.7% when measured on a blended basis that includes AI and legacy chip lines together.
Qualcomm (QCOM) represents a different kind of rival, competing more in mobile and edge AI chips than in data center custom silicon. Qualcomm trades at a much cheaper multiple than either Broadcom or Marvell, since its core smartphone chip business grows far more slowly than AI infrastructure demand.
Broadcom’s moat comes from its combination of scale, existing hyperscaler relationships, and its VMware software business, which diversifies revenue away from pure chip cyclicality. That diversification is a key reason Broadcom trades at a discount to Marvell despite arguably having more durable AI exposure.
What’s Driving AVGO Stock Going Forward?
The September 2 earnings report is the clearest near-term catalyst. Investors will look for confirmation that AI semiconductor bookings keep growing and that Broadcom can begin converting that backlog into shipped, recognized revenue.
The Samsung partnership matters too. If details firm up around dollar figures and timelines, that could meaningfully raise long-term AI revenue estimates for Broadcom’s custom silicon business.
Regulatory risk deserves ongoing attention. The EU antitrust dispute over VMware remains unresolved, and any escalation could create legal costs or business restrictions in Europe.
Hyperscaler capital spending trends will also shape the setup. Because Broadcom’s custom chip business depends heavily on a small number of very large customers, any pullback in AI infrastructure budgets from those buyers would ripple through Broadcom’s order book quickly.
Estimate a company’s fair value instantly (Free with TIKR) >>>
Should You Invest in Broadcom?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up AVGO, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track AVGO alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze AVGO stock on TIKR Free→
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!
