SuperworthBroadcom Inc. AVGO
- Market cap
- $1.8T
- PE
- 48.1×
- 10y median 44.4×
- Forward PE
- Price to sales
- 20.2×
- EV/EBIT
- 44.0×
- Revenue, 12 months
- $89.1B
- +49% on a year ago
- Net margin
- 42.9%
- Free cash flow yield
- 2.2%
Sales tripled on VMware and AI chips, and a few buyers hold the next leg
Cheap on next year's earnings and costly on today's sales. The gap closes only if revenue nearly triples again.
Up more than fourfold in three years, a fifth below the June high
Broadcom's share price went from 84.53 dollars three years ago to 375.81 on October 6, up 345%. It peaked at 481.57 on June 2, before second quarter results, and fell after management left its full year AI chip forecast unchanged. It is now 22.0% below that high and 12.0% above where it stood a year ago.
Cheap against its peers and recent years, not its long history
Consensus earnings put Broadcom at 21.6 times the next twelve months. The five year median is 23.6, the high 43.4 in December 2025. Its peers sit at 33.2. Over ten years it is higher than 72% of days, against a median of 15.0. The multiple uses adjusted earnings, which leave out stock pay and amortization from buying VMware, so GAAP earnings run about 20% lower. Points before September 22 use today's estimates.
Revenue tripled, first on VMware, now on AI chips
Quarterly revenue went from 9.29 billion dollars in late 2023 to 29.59 billion in the quarter to August 2. VMware, a cloud software company bought in late 2023, took software from 2.0 billion to 8.8 billion a quarter. Chips went from 7.3 billion to 20.8 billion, and the company says 16.7 billion of that was AI chips, up 221%. Lighter bars show consensus of 34.88 billion for the quarter to November 2.
So far AI growth has widened margins
In the quarter to August 2, operating profit was 53.9% of sales, the highest of any quarter in ten years. Gross margin, what is left after the cost of making the product, is back near 69%, close to its peak. So far AI growth has added profit faster than sales, not thinned margins. The risk: if custom AI chips carry lower gross margins than software, a growing AI share would pull that 69% down.
The fear is a short customer list
Broadcom sells custom AI chips and networking to a few of the largest AI companies. That AI revenue was 16.7 billion of 29.59 billion in sales last quarter, about 56%, and is guided to 21.7 billion this quarter. If one buyer slows or switches, sales fall fast. Estimates for the quarter to February span 33.90 to 38.67 billion. The stock costs 45.5 times free cash flow, against a ten year median of 18.3.
Cheap for the growth, expensive for the cash
Consensus sees revenue of 157.05 billion over the next twelve months, 76% above the last four quarters, and adjusted EPS of 17.38, up 78%. PEG is the P/E on adjusted earnings divided by that growth rate, so below 1 means cheap for the growth. At 0.49 it is near its ten year low. On cash earned so far it looks the other way: a free cash flow yield of 2.2%, against a ten year median of 5.47%.
The price needs revenue to nearly triple in two years
On trailing sales Broadcom costs 20.1 times, higher than 85% of the last ten years, against a median of 7.6. Consensus sees revenue nearly tripling in two years, from 89.10 billion to 247.97 billion, with adjusted EPS of 26.97. That puts today's price at 13.9 times those earnings. It looks cheap only if that ramp arrives. The test is December 9: whether Broadcom's AI outlook for fiscal 2027 matches it.
What has happened lately
Headlines link to the original source.
Charts
Financials
| Income statement | Q4 FY23 | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 | Q3 FY26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $9.3B | $12B | $12.5B | $13.1B | $14.1B+51% | $14.9B+25% | $15B+20% | $16B+22% | $18B+28% | $19.3B+30% | $22.2B+48% | $29.6B+86% | |
| Cost of revenue | $2.9B | $4.6B | $4.7B | $4.7B | $5.1B+75% | $4.8B+4% | $4.8B+2% | $5.2B+11% | $5.8B+14% | $6.2B+29% | $6.8B+41% | $9.1B+74% |
| Gross profit | $6.4B | $7.4B | $7.8B | $8.4B | $9B+41% | $10.1B+38% | $10.2B+31% | $10.7B+28% | $12.2B+36% | $13.2B+30% | $15.4B+51% | $20.5B+91% |
| R&D | $1.4B | $2.3B | $2.4B | $2.4B | $2.2B+61% | $2.3B−2% | $2.7B+12% | $3B+30% | $3B+33% | $3B+32% | $3B+11% | $2.9B−5% |
| SG&A | $418M | $1.6B | $1.3B | $1.1B | $1B+142% | $949M−40% | $1.1B−15% | $1.1B−3% | $1.1B+10% | $1B+7% | $1.1B−3% | $996M−7% |
| $4.2B | $2.1B | $3B | $3.8B | $4.6B+9% | $6.3B+201% | $5.8B+97% | $5.9B+55% | $7.5B+62% | $8.6B+37% | $10.8B+85% | $16B+171% | |
| Interest expense | $405M | $926M | $1B | $1.1B | $864M+113% | $873M−6% | $769M−27% | $754M−29% | $761M−12% | $746M−15% | $745M−3% | $778M+3% |
| Pre-tax income | $4B | $1.3B | $2B | $2.8B | $3.8B−5% | $5.5B+309% | $5.1B+154% | $5.3B+88% | $6.9B+83% | $8.2B+49% | $10.1B+99% | $15.3B+189% |
| $443M | $68M | −$116M | $4.2B | −$442M | −$13M | $120M | $1.1B−73% | −$1.6B+273% | $846M | $820M+583% | $2.2B+91% | |
| Net income | $3.5B | $1.3B | $2.1B | −$1.9B | $4.3B+23% | $5.5B+315% | $5B+134% | $4.1B | $8.5B+97% | $7.3B+34% | $9.3B+88% | $13.1B+216% |
| $0.83 | $0.28 | $0.44 | −$0.40 | $0.90+8% | $1.14+307% | $1.03+134% | $0.85 | $1.74+93% | $1.50+32% | $1.91+85% | $2.68+215% | |
| 4.3B | 4.7B | 4.8B | 4.7B | 4.8B+13% | 4.8B+4% | 4.8B+1% | 4.9B+4% | 4.9B+1% | 4.9B+1% | 4.9B+1% | 4.9B+1% |
From each company's 10-Q and 10-K filings. Fiscal years are four fiscal quarters added up; balance sheet lines are as of the period's end. Growth is on the same period a year earlier.
Estimates
Next earnings report: .
Analyst consensus for the next eight quarters, with the range from the lowest to the highest estimate, is part of Superworth Pro.
Peers
Companies in Semiconductors within ten times Broadcom's size, closest in size first.
| Company | Market cap | PE | Its 10y median PE | Fwd PE | P/S | Revenue growth | Net margin |
|---|---|---|---|---|---|---|---|
| AVGOBroadcom Inc. | $1.8T | 48.1× | 44.4× | 20.2× | +49% | 42.9% | |
| MUMicron Technology, Inc. | $1.2T | 14.7× | 17.4× | 9.2× | +256% | 63.8% | |
| AMDAdvanced Micro Devices, Inc. | $1.1T | 166× | 109× | 25.5× | +40% | 15.6% | |
| NVDANVIDIA Corporation | $5.7T | 30.0× | 53.9× | 18.9× | +83% | 63.7% | |
| AMATApplied Materials, Inc. | $413.2B | 44.9× | 19.7× | 13.4× | +8% | 30.1% | |
| LRCXLam Research Corporation | $412.3B | 57.2× | 21.0× | 17.7× | +26% | 31.3% | |
| TXNTexas Instruments Incorporated | $263.9B | 44.0× | 24.1× | 13.6× | +17% | 31.1% | |
| KLACKLA Corporation | $257.2B | 53.7× | 23.8× | 18.9× | +12% | 35.6% | |
| MRVLMarvell Technology, Inc. | $249.6B | 94.0× | 31.6× | 26.4× | +31% | 27.9% | |
| ADIAnalog Devices, Inc. | $198.7B | 48.6× | 39.1× | 14.3× | +34% | 29.8% | |
| QCOMQUALCOMM Incorporated | $186B | 20.2× | 20.2× | 4.2× | +2% | 21.0% | |
| Peer median | $338.1B | 46.8× | 23.9× | 16.0× | +28% | 30.6% |
About
- Chief executive
- Hock Tan, since 2006CEO of Avago since 2006, which bought Broadcom in 2016. Source
- Industry
- Semiconductors
- Sector
- Technology
Valuation data, not investment advice. Prices as of .