Broadcom Inc. (AVGO)

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AI: Overvalued

Price checkThe shares price in exceptional growth and leave little room for disappointment.

At $392.99, 4.758 billion shares imply a market value near $1.87 trillion. The trailing four quarters produced $6.01 of earnings per share and about $32.8 billion of free cash flow, meaning cash left after running and investing in the business. That equals roughly 65 times trailing earnings and 57 times free cash flow per share, with a cash yield below 2%. Reaching a more restrained 30 times earnings would require annual earnings above $13 per share—more than double the trailing result.

Big pictureRapid growth and strong cash generation are real, but unusually concentrated.

Revenue rose from $23.9 billion in fiscal 2020 to $63.9 billion in 2025, while operating cash flow increased every year from $12.1 billion to $27.5 billion. Fiscal second-quarter 2026 revenue reached $22.2 billion, up 48% yearly, and free cash flow rose 60% to $10.3 billion. This supports earnings durability despite volatile reported profit. However, Broadcom says its five largest end customers generated about 45% of recent revenue, while artificial intelligence and wireless orders can shift between quarters, magnifying semiconductor cycles.

Business strengthStrong liquidity contains debt risk, while stock awards still dilute shareholder gains.

Broadcom held $19.6 billion of cash against $64.9 billion of debt on May 3, leaving $45.3 billion of net debt. Current assets of $42.2 billion comfortably exceeded $18.9 billion of current liabilities, and net debt equaled about 1.4 times trailing free cash flow, making repayment manageable. Capital allocation is less clean: first-half share repurchases totaled about $8.45 billion and dividends $6.18 billion, yet shares increased from 4.741 billion to 4.758 billion. Stock compensation was $4.27 billion, so repurchases have not fully translated into lower ownership dilution.

What could change the storyFaster artificial intelligence growth could justify the price, while misses would expose it.

Management guided fiscal third-quarter revenue to $29.4 billion, including $16 billion of artificial intelligence semiconductor revenue, more than triple the prior-year level. Apple’s commitment exceeding $30 billion and the planned 20-gigawatt computing platform strengthen the bull case. Even so, annual free cash flow must approach $62 billion—nearly double the trailing figure—to put the current market value near 30 times cash flow. A sustained guidance beat could close that gap; weaker customer deployments, costly financing support, or slower software renewals would leave the valuation difficult to defend.

$392.99 price considered

AI: News

Expectations Beat ResultsRecord growth still missed the market’s unusually high artificial intelligence expectations.

On June 3, Broadcom reported second-quarter revenue of $22.19 billion, up 48%, and free cash flow of $10.26 billion. Artificial intelligence semiconductor revenue rose 143% to $10.8 billion. Management projected $16 billion for the fiscal third quarter, below the roughly $17.2 billion some analysts expected. Shares fell 12.6% on June 4. The reported business remained strong; the reaction showed that the valuation required forecasts to exceed already aggressive expectations.

Large Computing PlatformThe new financing platform could turn laboratory demand into very large chip orders.

On June 9, Broadcom, Apollo and Blackstone launched a platform intended to fund more than 20 gigawatts of computing capacity through 2028. An initial $35 billion financing supports more than one gigawatt for Anthropic, with Broadcom processors and networking products central to the equipment. This could convert demand from Anthropic and OpenAI into large orders. Broadcom’s filing also warns that novel financing arrangements may reduce margins or create credit, guarantee, and customer-default exposure. No reliable isolated one-day stock reaction was established.

Apple Extends PartnershipApple’s long contract improves sales visibility and eases fears it will replace Broadcom.

On July 8, Apple announced a Broadcom agreement expected to exceed $30 billion and produce more than 15 billion American-made chips through 2031. Broadcom plans to invest $1.5 billion in its Colorado facility. Reuters reported that Broadcom shares gained about 4.2% that day. The commitment extends demand for custom wireless and connectivity components, reducing near-term replacement risk from Apple’s internal chip development, although it also reinforces Broadcom’s dependence on a small group of very large customers.

VMware Security IncidentAn actively exploited software flaw raised customer trust and renewal risks.

Broadcom disclosed the critical VMware vCenter flaw on July 29 and issued an emergency patch. By August 7, researchers reportedly associated compromises across 361 internet addresses in 47 countries with exploitation that began August 3. Broadcom shares fell 5.94% on August 14, closing at $392.99. Contemporary coverage connected the decline with the security report, but timing alone cannot establish full causation. The business risk is higher remediation expense and weaker VMware renewal confidence if enterprise customers judge patching or product security inadequate.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016
Revenue	$63.89B	$51.57B	$35.82B	$33.20B	$27.45B	$23.89B	$22.60B	$20.85B	$17.64B	$13.24B
Gross profit	$43.29B	$32.51B	$24.69B	$22.09B	$16.84B	$13.52B	$12.48B	$10.73B	$8.51B	$5.94B
Research & development	$10.98B	$9.31B	$5.25B	$4.92B	$4.85B	$4.97B	$4.70B	$3.77B	$3.30B	$2.67B
Operating expenses	$17.81B	$19.05B	$8.48B	$7.87B	$8.32B	$9.50B	$9.04B	$5.60B	$6.14B	$6.35B
Operating income	$25.48B	$13.46B	$16.21B	$14.22B	$8.52B	$4.01B	$3.44B	$5.13B	$2.37B	−$409.0M
EBITDAderived	$34.12B	$23.32B	$19.96B	—	—	—	$9.25B	$9.22B	$7.11B	$2.63B
Net income	$23.13B	$5.89B	$14.08B	$11.49B	$6.74B	$2.96B	$2.72B	$12.26B	$1.69B	−$1.74B
Basic EPSper diluted share	$4.91	$1.27	$3.39	$2.74	$15.70	$6.62	$6.77	$29.33	$4.18	-$4.75
Diluted EPSper diluted share	$4.77	$1.23	$3.30	$2.65	$15.00	$6.33	$6.43	$28.44	$4.02	-$4.86

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys5$1.93M disclosed value

Sells (SEC code S)388$1.66B disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 25, 2026Form 4	Brazeal Mark DavidChief Legal & Corp Affairs Ofc	SellCommon Stock, $0.001 par value	25.0K	$387.00	$9.68M	245.0K
Jun 24, 2026Form 4 · 10b5-1	SAMUELI HENRYDirector	SellCommon Stock, $0.001 par value · indirect	217	$388.17	$84.2K	30.25M
Jun 24, 2026Form 4 · 10b5-1	SAMUELI HENRYDirector	SellCommon Stock, $0.001 par value · indirect	6.5K	$386.39	$2.50M	30.25M
Jun 24, 2026Form 4 · 10b5-1	SAMUELI HENRYDirector	SellCommon Stock, $0.001 par value · indirect	47.5K	$385.61	$18.32M	30.25M
Jun 24, 2026Form 4 · 10b5-1	SAMUELI HENRYDirector	SellCommon Stock, $0.001 par value · indirect	41.3K	$384.63	$15.88M	30.30M

Review ownership filings at SEC.gov ↗

Broadcom Inc. (AVGO)

Financial charts

Financial statements

Insider buys & sells