ContextBroadcom Inc. (AVGO) has firmly established itself as an indispensable powerhouse in the artificial intelligence …

Context

Broadcom Inc. (AVGO) has firmly established itself as an indispensable powerhouse in the artificial intelligence infrastructure boom. In its latest fiscal third-quarter results for 2026, the company reported explosive 86% year-over-year revenue growth to $29.6 billion, fueled by a 221% surge in AI semiconductor revenue which brought in $16.7 billion. CEO Hock Tan has outlined aggressive long-term projections, targeting $115 billion in AI-related revenue for fiscal 2027 and $230 billion by fiscal 2028.

However, despite these staggering fundamentals, AVGO stock is currently trading around $362.51—nearly 27% below its June 2026 record high of $495. The broader market has heavily penalized Broadcom due to a combination of macro tech sector consolidation, gross margin compression from lower-margin custom hardware mixes, and growing concern over customer concentration. Broadcom relies on just six core hyperscaler custom silicon (XPU) customers—most notably Google and Meta—alongside a complex, headline-making $42 billion custom-chip financing and leasing deal with Anthropic.

My trade

• The Play: Long Equity Accumulation / Bull Put Spreads

• Execution Strategy: Buy AVGO equity shares outright at the current level of $362.51, which places the stock at a highly attractive 19x forward price-to-earnings (P/E) multiple—a steep discount relative to peer giants like NVIDIA (25x) and Marvell (62x).

Takeaway

Broadcom is essentially a “tollbooth” on the global deployment of custom AI accelerators and next-generation networking switches. While critics point to the risks of circular customer financing and high concentration, Broadcom’s asset-light business model allows it to generate exceptionally lucrative free cash flow ($13.66 billion in a single quarter alone). Wall Street’s current average 12-month price target hovers around $424 to $533.