Does the Recent AI Partnership Mean Broadcom Shares Still Offer Value in 2025?

• Wondering if Broadcom's soaring share price still leaves room for value? You are not alone. Investors everywhere are trying to work out if it's still worth jumping in.
• Broadcom has climbed an impressive 18.4% in just the last week, building on significant gains of 73.7% year-to-date and a notable 151.1% return over the past year.
• Recent headlines spotlight Broadcom’s high-profile moves in the tech sector, such as major partnerships and expansion into artificial intelligence infrastructure. This has fueled both investor excitement and a reassessment of its long-term growth prospects.
• Despite this momentum, Broadcom’s valuation score stands at 0 out of 6, indicating it currently appears overvalued by every check we run. Here is a breakdown of how different valuation methods compare, and why taking a deeper perspective might change your view by the end of this article.

Broadcom scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Broadcom Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's true worth by projecting future cash flows and then discounting them back to today's value. This approach is commonly used because it focuses on the actual money a business generates rather than relying only on accounting profits or market sentiment.

For Broadcom, current Free Cash Flow stands at $24.8 Billion. According to analyst estimates and further extrapolation by Simply Wall St, Broadcom’s Free Cash Flow could reach as high as $163.1 Billion by 2035. Notably, analysts provide detailed forecasts only for the next five years, with 2029’s estimate already at $94.1 Billion. Beyond that, figures are modeled based on expected growth rates.

After discounting all these projected cash flows back to today, the model calculates an intrinsic value for Broadcom of $306.23 per share. However, when compared to Broadcom’s current share price, this result shows the stock is trading at a 31.6% premium to its estimated fair value. This may indicate that it is substantially overvalued at the moment.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Broadcom may be overvalued by 31.6%. Discover 913 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Broadcom.

Approach 2: Broadcom Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to valuation metric for profitable companies like Broadcom. This ratio gives investors a snapshot of how much they are paying for each dollar of current earnings, making it especially relevant for stable businesses generating strong profits.

Growth expectations and risk are key factors that help determine what a “normal” or “fair” PE ratio should be. Companies expected to grow faster or with lower perceived risk often justify higher PE ratios, while those with slower growth or greater risks typically command lower multiples.

Currently, Broadcom trades at a lofty PE ratio of 101.1x. For context, the average for its Semiconductor industry peers is only 36.1x, and the peer group average stands at 55.0x. While those numbers already suggest Broadcom trades at a premium, it is important to look deeper using a more customized approach.

Simply Wall St’s proprietary “Fair Ratio” weighs not just industry benchmarks, but also Broadcom’s earnings growth, profit margins, market cap, and specific risks. This tailored Fair Ratio, set at 69.2x, aims to better reflect what investors should reasonably pay, rather than relying solely on peer or industry measures.

Given that Broadcom’s actual PE ratio of 101.1x is significantly higher than its Fair Ratio, this signals the stock is trading well above what would be considered justified based on its fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1437 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Broadcom Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. This tool lets you shape your own story about Broadcom by connecting your assumptions and forecasts to a personalized fair value. It bridges the gap between the numbers and the company’s real-world journey.

A Narrative makes investing accessible by allowing you to define your view on Broadcom's future, from revenue growth and profit margins to what you believe is a fair share price. This gives context to your expectations and makes your investment thesis more transparent.

On Simply Wall St’s Community page, Narratives are used by millions of investors to instantly compare their own fair value estimates with others and with the current market price. This helps them decide whether it’s the right time to buy or sell and supports smarter, more confident decisions.

One of the key benefits is that Narratives are dynamic. They automatically update alongside new earnings announcements or pivotal news events, keeping your forecast relevant and actionable as the story unfolds.

For example, some Broadcom investors expect a bullish future, using the highest analyst fair value estimate of $415.56 if AI partnerships drive rapid growth. Others adopt a more cautious Narrative with a fair value of $218.00 due to concerns about competition and debt. Whichever story you believe, Narratives let you see how your view compares in real time.

Do you think there's more to the story for Broadcom? Head over to our Community to see what others are saying!

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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