Broadcom Is ‘Sitting on a Sinking Iceberg.’ Why 1 Analyst Is Warning on AVGO Stock Here.

Artificial intelligence (AI) is expected to set fresh records this year, and hyperscalers refuse to cede an inch. They continue to funnel record capital into data centers and advanced computing, determined not to trail their rivals. Into this charged setting, D.A. Davidson has initiated coverage on Broadcom (AVGO).

Analyst Gil Luria argued that the company stands on a “shrinking iceberg” as hyperscalers increasingly favor customized accelerators. He acknowledged AI application-specific integrated circuits’ (ASICs) growing relevance yet questioned the durability of Broadcom’s long-term positioning in that market.

The firm warned that the largest customers could internalize more of the AI stack over the next few years. If hyperscalers design more tooling and silicon in-house, suppliers may feel margin pressure.

On that basis, D.A. Davidson concluded that Broadcom’s AI ASIC exposure does not merit a premium multiple versus leaders such as NVIDIA (NVDA) and assigned the stock a “Neutral” rating. So let us find out whether Broadcom truly stands on a shrinking iceberg or continues to build firmer ground beneath it.

Headquartered in Palo Alto, California, Broadcom is a global technology powerhouse that develops semiconductor devices and enterprise software. With a market cap of roughly $1.5 trillion, it develops networking chips, wireless and broadband components, storage and server solutions, cybersecurity tools, and cloud infrastructure platforms.

Over the past three months, the stock has slipped 2.55%, reflecting near-term pressure. Yet the broader trend tells a more positive story. Shares have advanced 9% over the past six months and rallied 43.28% across the past 52 weeks, underscoring sustained momentum beyond short-term volatility.

From a valuation standpoint, AVGO stock is currently trading at 38.08 times forward-adjusted earnings and 15.90 times sales, both signaling a premium multiple.

In addition, Broadcom has grown its dividends for 15 consecutive years. It pays an annual dividend of $2.60 per share, which equates to a 0.80% yield. The company paid its most recent dividend of $0.65 per share on Dec. 31, 2025, to shareholders of record as of Dec. 22, 2025.

On Dec. 11, 2025, Broadcom reported fourth-quarter fiscal 2025 results, wherein revenue reached $18.02 billion, surpassing the $17.49 billion analyst estimate. Total revenue climbed 28.2% year-over-year (YOY) driven largely by a 74% surge in AI chip sales, which totaled $8.2 billion for the quarter.