Quick Read
Broadcom’s AI semiconductor revenue surged 221% to $16.7B, and management projects $230B by fiscal 2028 at just 12x forward earnings.
NVIDIA trades near 48x trailing earnings with $108.5B in guarantee obligations, giving Broadcom’s 15-year dividend streak and lower multiple a clear edge.
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I keep adding to my Broadcom (NASDAQ:AVGO) position, and the growing worry about circular financing with Anthropic just gave me another chance to do it. Every quarter I look for a reason to stop. Every quarter this company gives me a new reason to keep going.
Why I Keep Coming Back
Broadcom co-designs custom AI chips with the few companies building frontier models, then sells them the networking that ties those chips together. That model locks in relationships that run across several chip generations. Management described a long-term Google agreement that could involve “multi-tens of billions of dollars of TPUs annually over the next several years.” That stickiness is what I pay for.
Three Numbers That Keep My Buy Button Active
First, growth. Fiscal Q3 revenue hit $29.59 billion, up 85.5% year over year, and AI semiconductor revenue reached $16.70 billion, up 221%. Q4 guidance calls for $34.80 billion in revenue and $21.70 billion in AI revenue. Management projects AI semiconductor revenue of about $115 billion in fiscal 2027 and $230 billion in fiscal 2028.
Second, cash. Free cash flow reached $13.67 billion, equal to 46% of revenue. In that same quarter, Broadcom paid $3.1 billion in dividends and retired $5.6 billion of debt due beyond a year. The $0.65 quarterly dividend got its 15th consecutive annual increase in December 2025. At $362.51, the yield stands near 0.72%. My reason for holding is the growth of that payout, and the starting yield matters less to me.
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Third, valuation. Management says Broadcom is “very much on target to exceed $30 in earnings per share in fiscal 2028.” At today’s price, that works out to about 12x fiscal 2028 earnings. The shares rose just 7.93% over the past year while revenue nearly doubled, and over ten years they rose 2574.14%.
Source: finance.yahoo.com
