Shares of Broadcom (AVGO) continued to draw attention on Wall Street as the wave of AI infrastructure extends past GPUs and semiconductor packaging innovations.
As the latest catalyst, Applied Materials Inc. (AMAT) has announced that Broadcom has become its latest partner under its EPIC platform to develop cutting-edge innovations in AI chip applications. Collaboration adds further fuel to the growing trend: AI performance is not only a function of computer skills, but also of effective communication between multiple chips within the system.
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About Broadcom Stock
Broadcom Inc. is one of the largest semiconductor and infrastructure software companies in the world. Headquartered in Palo Alto, California, Broadcom manufactures customized AI accelerators, network chips, communications, and enterprise infrastructure software products. As of writing, Broadcom has a market capitalization of approximately $1.96 trillion.
Shares of AVGO stock have performed exceptionally well over the past 12 months. Broadcom recently traded at $414.74 per share, representing about 86% upside from the 52-week low of $226.18 and well below the recent high of $442.36. AVGO outperformed the S&P 500 Index (SPY) as investors continued to favor AI infrastructure stocks.
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Although it trades at very high valuations, much of that is due to the strength of Broadcom’s business model and growth profile. For example, Broadcom trades at 41.24x forward earnings and 30.46x sales. Furthermore, the price-earnings multiple came in at 68.97x, which may seem high based on typical semiconductor competitors. However, Broadcom has much higher margins, posting a profit margin of 36.2% and an adjusted EBITDA margin of nearly 68%.
Broadcom has also been friendly to its shareholders through dividend payments and buybacks. Broadcom paid a dividend of $0.65 per quarter and made a significant return on investment amid strong cash flow.
Highlights of the earnings report from Broadcom
In March, Broadcom released Q1 2026 earnings results that beat Wall Street expectations. The company’s revenue jumped 29% year over year to reach $19.31 billion. Non-GAAP net income rose to $10.19 billion, while non-GAAP diluted EPS reached $2.05.
Once again, the star actor was part AI. Broadcom recorded AI-related semiconductor revenue of $8.4 billion, representing 106% year-over-year growth. In particular, Broadcom CEO Hock Tan said the demand for AI accelerators and network connectivity remains the strongest among hyperscalers.
The company also issued strong guidance for Q2. Broadcom expects second quarter profit of about $22 billion, which should be up 47% year over year. Broadcom also guided for an adjusted EBITDA margin of 68% in Q2, indicating strong operational performance.
A recent partnership with Applied Materials is likely to provide more development for Broadcom in the coming years. Indeed, semiconductor packaging is becoming an important factor as AI systems evolve into multichip architectures, which require fast communication between all AI elements. Under the EPIC platform, Broadcom will be able to leverage a global network of Applied Materials R&D and innovation centers.
Most importantly, however, the deal reflects a broader shift in the industry. The race in AI is not just to produce the most powerful chip. Communications, packaging, imaging, power delivery, and networking will also play a key role going forward.
Broadcom Analyst Ratings
Analysts still view Broadcom stock favorably following its attractive earnings and rapid growth in AI-related segments with a “Strong Buy” rating. Indeed, Wall Street analysts believe that Broadcom will continue to benefit along with Nvidia as hyperscalers begin to invest heavily in AI. On average, the price target for AVGO stock is $479.40. In addition, the high price of the street reaches $630, which represents great upside potential.
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At the date of publication, Yiannis Zourmpanos held a position at: AVGO. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
