Can $AVGO Turn the AI Boom Into Another Decade of Gains?

Hi Tigers! 🐯

$Broadcom(AVGO)$ is more than just an AI chip play.

Its networking business, custom AI silicon, strong margins, and M&A track record all add to the bull case. 📈

🧠 Why the bull case is compelling

🔹 AI Networking: Larger AI clusters need more Ethernet switches and networking chips, putting Broadcom in a strong position to benefit from expanding AI infrastructure.

📱 5G & Smartphones: Broadcom’s RF chips are used in high-end 5G phones, including the iPhone.

🤖 Custom AI Chips: Broadcom designs custom chips for Google and other hyperscalers, offering an alternative to Nvidia GPUs for certain workloads.

🏢 M&A Playbook: Its VMware acquisition shows how management can use acquisitions to expand the business and improve margins.

💰 Profitability is a major strength

• Gross margin: 69%

• EBIT margin: 48%

• Net margin: 43%

• Free cash flow margin: 44%

📊 Growth since 2022

• Revenue: +168%

• EBIT: +201%

• EPS: +195%

• Free cash flow: +142%

🔮 The 2028 bull case

Estimates point to substantial growth ahead:

• Revenue: $272B

• EPS: $30.39

• Free cash flow: $136B

These figures imply projected CAGRs of 64%, 83%, and 73%, respectively. Those are ambitious expectations, so execution will matter.

🎯 What about valuation?

• TTM P/E: 42

• Projected 2028 P/E: 11

• Lowest analyst price target: $216

• Consensus target: $528

• Highest target: $660

The supplied targets imply a wide range of potential outcomes. The consensus and high-end targets suggest upside from the reference price used in the analysis, while the lowest target points to downside risk. ⚖️

📈 A remarkable long-term run

$AVGO has delivered positive annual returns in most years since 2013, including +99.7% in 2023 and +107.7% in 2024. It gained another 49.3% in 2025, though its 2026 year-to-date return in the supplied data is -5.0%.

Broadcom combines AI infrastructure exposure with custom-chip opportunities, high margins, and strong cash generation. The big question is whether future growth can live up to the market’s expectations.

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