A Look at Broadcom (AVGO) Valuation as Wall Street Optimism Grows on AI Partnerships and Cloud Deals

Broadcom (AVGO) caught Wall Street’s attention this week as several analysts pointed to its deepening partnerships in AI hardware. Recent updates include Google’s use of Broadcom-designed TPUs for its Gemini 3 AI model and new strategic cloud deployments.

See our latest analysis for Broadcom.

Building on these high-profile partnerships and product launches, Broadcom’s latest share price sits at $386.08. While the stock experienced a sharp pullback after recent highs, its momentum remains impressive, highlighted by a 27.7% 90-day share price return and a 131.9% total shareholder return over the past year. Both Wall Street and institutional investors are keeping a close watch for ongoing growth, especially as Broadcom expands its footprint across the AI and cloud computing landscape.

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With Broadcom’s shares surging on excitement around AI and cloud partnerships, the key question is whether the current price reflects these future growth drivers or if there is still room for investors to benefit from further upside.

Most Popular Narrative: 4.4% Undervalued

Broadcom's latest fair value, as calculated in the most followed narrative, sits slightly above its last close price. This setup reflects analyst conviction that recent AI-driven momentum is still not fully captured in the market price.

Broadcom is experiencing accelerating demand for custom AI accelerators (XPUs) from hyperscale and large language model customers, underscored by the addition of a major fourth customer and a strengthened backlog. This indicates robust multi-year revenue growth in the AI semiconductor segment.

Read the complete narrative.

How high could the story reach? The key to this narrative’s bold calculation lies in game-changing growth forecasts and a powerful shift in future profit margins. Want to see which building blocks are driving the fair value above market price? Uncover the projections analysts are betting on for Broadcom’s next chapter.

Result: Fair Value of $403.66 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still risks to watch, such as increased competition and concentration among AI customers, which could impact Broadcom’s projected growth trajectory.

Find out about the key risks to this Broadcom narrative.

Another View: Multiples Tell a Different Story

Looking through the lens of market pricing, Broadcom is currently trading at a price-to-earnings ratio of 96.9x, which is notably higher than both the US semiconductor industry average of 35.7x and the peer average of 55.6x. Even compared to its fair ratio of 66x, the stock appears pricey, suggesting investors are paying a premium for its anticipated growth.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Broadcom Narrative

If you want to challenge these perspectives or dig deeper into Broadcom’s fundamentals, it’s quick and easy to build your own outlook using our tools. Do it your way.

A great starting point for your Broadcom research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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