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Broadcom Unveils Quantum-Safe Switch: What's Ahead for the Stock?

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Key Takeaways

  • Broadcom introduced 128G Fibre Channel platforms to secure and accelerate enterprise workloads.
  • The Brocade X8 and G820 add high bandwidth, low latency and quantum-safe features for AI data centers.
  • Infrastructure Software revenues are expected to grow 15% year over year to $6.7 billion in Q4.

Broadcom (AVGO - Free Report) introduced the Brocade X8 Directors and Brocade G820 switches, the industry’s first 128G Fibre Channel platforms, designed to secure and accelerate mission-critical and AI-driven enterprise workloads. The new Brocade Gen 8 portfolio introduces quantum-safe security with 256-bit encryption and post-quantum cryptography, protecting storage networks against emerging quantum-era threats.

The Brocade X8 Director delivers massive scalability with up to 384×128G ports, high bandwidth, and ultra-low latency, making it suitable for large, consolidated storage environments. The compact 56-port Brocade G820 switch brings 128G performance and strong security to edge and top-of-rack deployments, offering robust throughput for modern and AI-intensive data center workloads.

Broadcom’s Brocade Fibre Channel switch products provide interconnection, bandwidth and high-speed switching between servers and storage devices, which are in a Fibre Channel Storage Area Network (FC SAN). The company offers these products under its Infrastructure Software business, which accounted for 42.5% of net revenues in the third quarter of fiscal 2025. Broadcom now expects Infrastructure Software revenues to grow 15% year over year to $6.7 billion for the fourth quarter of fiscal 2025.  

AVGO Faces Tough Competition

Broadcom is facing stiff competition from Cisco Systems (CSCO - Free Report) and Marvell Technology (MRVL - Free Report) . Cisco is benefiting from strong AI Infrastructure orders. In the first quarter of fiscal 2026, AI infrastructure orders from hyperscalers hit $1.3 billion, and Cisco expects $3 billion in AI infrastructure revenues from hyperscalers in fiscal 2026. The company also sees a growing pipeline of more than $2 billion in orders for its high-performance networking products across sovereign, Neocloud and enterprise customers.

Marvell Technology’s co-packaged optics are now gaining traction for AI-driven performance optimization with switching ASICs. This technology shortens electrical traces and reduces power consumption, improving performance per watt. Power-hungry DSPs or retimers are also getting replaced, adding to efficiency with this move. Marvell Technology’s latest networking products have optical fibres instead of copper connections, which are optimal for faster data transmission needs in AI systems.

AVGO’s Share Price Performance, Valuation & Estimates

Broadcom shares have appreciated 111.2% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 25.9%.

AVGO Stock Outperforms Sector

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The AVGO stock is trading at a premium, with a forward 12-month price/earnings of 37.57X compared with the broader sector’s 28.09X. Broadcom has a Value Score of D.

AVGO Stock has a Stretched Valuation

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at $6.72 per share, up by a penny over the past 60 days, suggesting 38% growth from fiscal 2024’s reported figure.
 

 

 

Broadcom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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