We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Broadcom is the world's leader in custom AI accelerators (XPUs) boosting the top line growth estimates.
Shares of AVGO are trading just below record highs amid a surge in momentum.
Broadcom ((AVGO - Free Report) ), one of the world’s preeminent semiconductor companies, stands out as one of the most compelling opportunities in the stock market today. Despite its nearly $2 trillion valuation, the company still trades at a discount to its growth outlook, with upward-trending earnings revisions supporting a Zacks Rank #1 (Strong Buy) rating. At the same time, shares continue to exhibit strong price momentum, sitting just below record highs.
While Nvidia has established itself as the leader in general-purpose AI GPUs, Broadcom has emerged as the go-to developer of custom AI accelerators (XPUs) for hyperscalers building their own silicon. The company now counts six major customers, including Alphabet, Meta Platforms, and OpenAI.
This positioning is driving a sharp acceleration in growth. Broadcom’s AI-related revenue has expanded from roughly 15% of total sales just two years ago to approximately 44% today, with the segment growing 106% year-over-year in the most recent quarter. The company has also disclosed a $73 billion AI-specific order backlog, while management has outlined a path toward $100 billion in AI revenue by 2027.
Broadcom’s execution has been equally impressive over the long term. The stock has compounded at an annual rate of 39% over the past decade and gained more than 140% over the last 12 months alone. Below, we break down why this exceptional growth trajectory is likely to continue, and why shares can still be owned at a reasonable valuation, with additional upside catalysts ahead.
Image Source: Zacks Investment Research
Broadcom Shares Gain on Earnings Upgrades
As noted, Broadcom continues to deliver exceptional growth, particularly given its scale. Sales are projected to increase more than 60% this year and nearly 50% next year, while earnings are expected to climb 68% this year and 55% next year.
Despite this rapid expansion, the valuation remains reasonable. Shares trade at roughly 35x forward earnings, while long-term EPS growth is projected at 48.6% annually, resulting in a PEG ratio of just 0.72, suggesting the stock is still trading at a discount relative to its growth profile.
The company’s top Zacks Rank is supported by strong upward momentum in analyst sentiment. Earnings estimates have been revised higher across all timeframes, with current year projections rising nearly 14% over the past 60 days and next year estimates up nearly 25%. Notably, revisions have continued as recently as the past week, signaling that analysts remain increasingly bullish on the stock.
Image Source: Zacks Investment Research
AVGO Stock on the Verge of a Breakout
With thematic, growth, and valuation catalysts firmly in place, the final box to check is technicals.
Broadcom stock has been consolidating for nearly nine months. During that period, sentiment toward mega-cap tech shifted, as investors questioned the sustainability of AI capex and stretched valuations. As a result, much of the group traded sideways to lower.
However, that consolidation has served a purpose. Valuations have reset, while underlying fundamentals have continued to strengthen. AI spending has not slowed and has even accelerated, undermining the bearish narrative.
More recently, with geopolitical concerns in the Middle East fading into the background, leadership stocks like Broadcom have regained momentum. Many are now breaking out from extended bases and moving back toward record highs.
Technically, AVGO has already broken out from a nested base and is now approaching its highs. Following a strong upward move, the stock has formed a tight bull flag continuation pattern over the past several sessions.
From here, the setup is constructive. A breakout would likely lead to a test of all-time highs, while any short-term pullback could present a secondary entry opportunity within an otherwise strong uptrend.
Image Source: TradingView
Should Investors Buy Shares in AVGO?
Broadcom checks nearly every box investors look for: powerful secular tailwinds, elite growth at scale, upward earnings revisions, and a constructive technical setup.
Despite its size and strong recent performance, the stock still trades at a reasonable valuation relative to its growth, with AI demand continuing to accelerate and visibility supported by a massive backlog.
With shares breaking out and momentum returning to the group, AVGO appears well-positioned to make another move higher. For investors looking to gain exposure to the AI buildout beyond traditional GPU leaders, Broadcom remains a compelling buy.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Bull of the Day: Broadcom (AVGO)
Key Takeaways
Broadcom ((AVGO - Free Report) ), one of the world’s preeminent semiconductor companies, stands out as one of the most compelling opportunities in the stock market today. Despite its nearly $2 trillion valuation, the company still trades at a discount to its growth outlook, with upward-trending earnings revisions supporting a Zacks Rank #1 (Strong Buy) rating. At the same time, shares continue to exhibit strong price momentum, sitting just below record highs.
While Nvidia has established itself as the leader in general-purpose AI GPUs, Broadcom has emerged as the go-to developer of custom AI accelerators (XPUs) for hyperscalers building their own silicon. The company now counts six major customers, including Alphabet, Meta Platforms, and OpenAI.
This positioning is driving a sharp acceleration in growth. Broadcom’s AI-related revenue has expanded from roughly 15% of total sales just two years ago to approximately 44% today, with the segment growing 106% year-over-year in the most recent quarter. The company has also disclosed a $73 billion AI-specific order backlog, while management has outlined a path toward $100 billion in AI revenue by 2027.
Broadcom’s execution has been equally impressive over the long term. The stock has compounded at an annual rate of 39% over the past decade and gained more than 140% over the last 12 months alone. Below, we break down why this exceptional growth trajectory is likely to continue, and why shares can still be owned at a reasonable valuation, with additional upside catalysts ahead.
Image Source: Zacks Investment Research
Broadcom Shares Gain on Earnings Upgrades
As noted, Broadcom continues to deliver exceptional growth, particularly given its scale. Sales are projected to increase more than 60% this year and nearly 50% next year, while earnings are expected to climb 68% this year and 55% next year.
Despite this rapid expansion, the valuation remains reasonable. Shares trade at roughly 35x forward earnings, while long-term EPS growth is projected at 48.6% annually, resulting in a PEG ratio of just 0.72, suggesting the stock is still trading at a discount relative to its growth profile.
The company’s top Zacks Rank is supported by strong upward momentum in analyst sentiment. Earnings estimates have been revised higher across all timeframes, with current year projections rising nearly 14% over the past 60 days and next year estimates up nearly 25%. Notably, revisions have continued as recently as the past week, signaling that analysts remain increasingly bullish on the stock.
Image Source: Zacks Investment Research
AVGO Stock on the Verge of a Breakout
With thematic, growth, and valuation catalysts firmly in place, the final box to check is technicals.
Broadcom stock has been consolidating for nearly nine months. During that period, sentiment toward mega-cap tech shifted, as investors questioned the sustainability of AI capex and stretched valuations. As a result, much of the group traded sideways to lower.
However, that consolidation has served a purpose. Valuations have reset, while underlying fundamentals have continued to strengthen. AI spending has not slowed and has even accelerated, undermining the bearish narrative.
More recently, with geopolitical concerns in the Middle East fading into the background, leadership stocks like Broadcom have regained momentum. Many are now breaking out from extended bases and moving back toward record highs.
Technically, AVGO has already broken out from a nested base and is now approaching its highs. Following a strong upward move, the stock has formed a tight bull flag continuation pattern over the past several sessions.
From here, the setup is constructive. A breakout would likely lead to a test of all-time highs, while any short-term pullback could present a secondary entry opportunity within an otherwise strong uptrend.
Image Source: TradingView
Should Investors Buy Shares in AVGO?
Broadcom checks nearly every box investors look for: powerful secular tailwinds, elite growth at scale, upward earnings revisions, and a constructive technical setup.
Despite its size and strong recent performance, the stock still trades at a reasonable valuation relative to its growth, with AI demand continuing to accelerate and visibility supported by a massive backlog.
With shares breaking out and momentum returning to the group, AVGO appears well-positioned to make another move higher. For investors looking to gain exposure to the AI buildout beyond traditional GPU leaders, Broadcom remains a compelling buy.