Key Takeaways:
- AI Demand Momentum: Broadcom stock benefits from accelerating AI-driven networking demand as hyperscalers increase custom silicon and connectivity spending, supporting revenue growth near 29%.
- Software Revenue Stability: Broadcom stock strengthens its earnings base after the VMware acquisition, with infrastructure software contributing recurring cash flows and operating margins above 60%.
- Price Target Outlook: Based on sustained revenue growth and operating margins reaching 65%, Broadcom stock could reach a $543 price target by late 2028.
- Upside Math: From a current price of $331, the $543 target implies 64% total upside and a 20% annualized return for Broadcom stock.
Broadcom (AVGO) designs advanced semiconductors and infrastructure software for data centers and enterprises, holding a critical position across AI networking and private cloud platforms.
On February 2, 2026, Broadcom confirmed it will report fiscal first-quarter results on March 4, following strong AI-related order momentum across the semiconductor sector.
Broadcom generated $64 billion in LTM revenue, which indicates scale advantages as AI connectivity, custom silicon, and software subscriptions expand concurrently.
Operating income reached $26 billion with operating margins near 41%, which explains Broadcom’s ability to fund R&D, acquisitions, and shareholder returns.
While Broadcom stock trades near $331 despite earnings strength and a $543 valuation target, the gap between execution and market confidence frames the debate ahead.
What the Model Says for AVGO Stock
We analyzed Broadcom stock using its scale in AI networking and software, linking strong operating income and cash generation to shareholder returns.
Based on 28.9% revenue growth, 64.5% operating margins, and a 28.1x exit multiple, the model projects continued earnings expansion.
That framework implies Broadcom stock reaches $542 with 63.9% total upside and a 19.7% possible annual return.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for AVGO stock:
1. Revenue Growth: 28.9%
Broadcom grew revenue from $36 billion in 2023 to nearly $64 billion LTM, reflecting sustained demand across AI networking, custom silicon, and enterprise software.
Growth accelerated in 2024 and 2025 as hyperscalers increased spending on connectivity and custom chips tied to AI workloads and data center expansion.
Forward growth depends on continued AI infrastructure buildouts and stable enterprise software renewals, while risks include customer concentration and cyclical semiconductor spending.
According to consensus analyst estimates, a 28.9% revenue growth assumption balances recent acceleration against the scale effects of a larger revenue base.
2. Operating Margins: 64.5%
Broadcom stock’s operating margins expanded from roughly 31% in 2021 to over 41% LTM, supported by mix shift toward high-margin software and scale efficiencies.
Recent quarters show EBITDA margins near 68% and EBIT margins above 66%, confirming strong cost control and pricing power across core businesses.
Margins face pressure from integration costs and R&D investment, but recurring software revenue and premium silicon content support sustained profitability.
In line with analyst consensus projections, 64.5% operating margins reflect normalized performance across semiconductors and infrastructure software at scale.
3. Exit P/E Multiple: 28.1x
Historically, Broadcom stock traded at earnings multiples between roughly 18x and 36x, depending on growth visibility, margin durability, and semiconductor cycle positioning.
The current valuation reflects optimism tied to AI exposure, balanced by caution around cyclicality and the integration of large software acquisitions.
Sustained revenue growth near 29% and operating margins above 60% are required to support a premium multiple through the next cycle.
Based on street consensus estimates, a 28.1x exit multiple reflects confidence in Broadcom’s earnings durability without assuming speculative multiple expansion.
What Happens If Things Go Better or Worse?
Broadcom stock’s outcomes depend on AI infrastructure demand, custom silicon adoption, and software execution, setting up a range of possible paths through 2030.
- Low Case: If AI spending slows and software integration tempers efficiency, revenue grows near 25.0% and margins stay near 48.8% → 13.6% annualized return.
- Mid Case: With AI networking and software executing steadily, revenue growth near 27.8% and margins improving toward 52.1% → 21.0% annualized return.
- High Case: If hyperscaler demand accelerates and software scales cleanly, revenue reaches 30.5% and margins approach 54.7% → 28.2% annualized return.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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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!
