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Broadcom (AVGO) shares rallied close to 20% following President Donald Trump’s 90-day pause onreciprocal tariffs. And it wasn’t just Broadcom. Peers Nvidia (NVDA), Qualcomc (QCOM), and Advanced Micro Devices (AMD) also witnessed significant upticks on Wednesday, April 9.
As of this writing on Thursday, April 10, the euphoria has faded, and Broadcom is trading down near 8%.
The big question now is has the risk-reward turned in favor of Broadcom? What are its competitive advantages that may make it a suitable pick for long-term investors? Let’s find out.
About Broadcom Stock
Tracing its origins back to 1961, Broadcom was formed in 2016 through the merger between Avago Technologies and Broadcom Corporation. The California-based company designs, develops, and supplies a broad range of semiconductor and infrastructure software products. Its offerings cater to diverse markets, including data centers, networking, broadband, wireless, storage, and industrial sectors.
Valued at a market cap of $870.6 billion, AVGO stock offers a dividend yield of 1.38%.
Consistent Growth and Strong Fundamentals
Broadcom’s prominent place in the semiconductor market has resulted in the company reporting impressive growth rates in revenue and earnings over the years. In the last 10 years, Broadcom’s revenue and earnings have clocked compound annual growth rates (CAGRs) of 26.5% and 35.1%, respectively.
Also, in the most recent quarter, Broadcom’s earnings and revenue exceeded Street expectations. Q1 2025 saw the company declaring revenues of $14.92 billion, up 25% from the previous year. Earnings went up by an even sharper 46% in the same period to $1.60, surpassing the consensus estimate of $1.51 per share.
Notably, increasing revenues were also accompanied by an improvement in gross margins to 68% in Q1 2025 versus 64% in Q1 2024.
Cash flows also remained robust, with cash flow from operations and free cash flow coming in at $6.1 billion and $6 billion in the first quarter of 2025 compared to $4.8 billion and $4.7 billion in the year-ago period. Overall, the company closed the quarter with a cash balance of $9.3 billion, which was much more than its short-term debt levels of $5.7 billion.
Meanwhile, the company has guided for revenues to be about $14.9 billion in Q2 2025, which would denote a yearly growth of 19.2%.
Strategic Drivers
Broadcom continues to exhibit long-term strength, underpinned by its healthy financial footing and rising exposure to AI infrastructure. A pivotal element in this narrative is the company’s newly introduced PCIe Gen 6 interconnect suite, which encompasses sophisticated switching hardware and cutting-edge retimer chips. These retimers are capable of transferring data at speeds of up to 64 Gbps per lane, representing a twofold improvement over previous iterations. This performance boost arrives at a critical juncture, as hyperscale cloud operators scale AI capabilities, with the improved throughput, minimized latency, and bottleneck reduction directly supporting high-efficiency AI accelerator operations.
At the same time, positive momentum in the global semiconductor industry plays to Broadcom’s advantage, particularly given its strength in providing customized application-specific integrated circuits and high-performance networking components — integral to today’s data-centric technologies. Complementing these hardware innovations, Broadcom is allocating substantial resources into R&D to preserve its competitive edge. Notably, it is developing the semiconductor industry’s first 2-nanometer AI XPU. Such a leap is aimed squarely at enabling hyperscalers to unlock vast computational capabilities and significantly enlarge AI cluster scale.
As part of this strategy, Broadcom is also actively advancing its hyperscale networking architecture, currently working on cluster expansion of up to 500,000 accelerators, with future ambitions to scale to 1 million XPUs. These will be linked via its next-generation 100-terabit Tomahawk 6 switch, a product already aligned with the technical roadmaps of several leading hyperscalers.
Meanwhile, Broadcom’s Infrastructure Software division is experiencing accelerated adoption as well, bolstered by the strategic pivot to a subscription-based model. By the end of Q1 FY25, the transition had already surpassed the halfway point, with over 60% of the customer base having shifted to recurring subscriptions. Among Broadcom’s largest 10,000 clients, nearly 70% have adopted VMware Cloud Foundation (VCF) to fully virtualize their data centers, paving the way for private cloud deployments on-premises.
This surge in VCF uptake coincides with rising enterprise demand to manage AI workloads within their own data centers. Broadcom, in collaboration with Nvidia, is addressing this demand through its VMware Private AI Foundation. This solution enables clients to deploy and manage AI models on-premises by virtualizing GPU infrastructure. As of the latest reporting quarter, 39 enterprise clients have adopted the platform, attracted by its open architecture, automation capabilities, and load balancing features. Broadcom’s deepening role in enterprise AI infrastructure through this platform sets the stage for future growth as organizations invest more heavily in scalable, secure, and customizable AI solutions.
Analyst Opinions on AVGO Stock
Taking into account all of these factors, analysts have deemed Broadcom stock to be a “Strong Buy” with a mean target price of $248, which denotes upside potential of about 45% from current levels. Among 32 analysts covering the stock, 29 have a “Strong Buy” rating and three have a “Hold” rating.
