Broadcom's Next Stop: $30B AI Revenue (Rating Upgrade)

Uttam Dey
3.13K Followers
(10min)

Summary

  • Broadcom's AI revenue is accelerating, now over 40% growth and on track for ~$30B by FY26, driven by strong demand from hyperscalers.
  • Recent earnings showed a surprise surge in AI networking and custom silicon sales, while XPU growth is expected to re-accelerate as key clients ramp up.
  • Management is increasing share buybacks, enhancing shareholder value even as the stock trades near all-time highs.
  • Given robust AI catalysts and conservative market expectations, I see at least 15% upside and upgrade Broadcom to a Buy.

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Investment Thesis

Maker and market leader of accelerated chips, or XPUs, Broadcom (AVGO) announced their Q2 FY25 earnings, which showed the AI growth engine is pacing at a very strong double-digit growth rate

This article was written by

3.13K Followers
Uttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AMD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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