Broadcom Stock Isn’t Cheap. Why Bulls Still See Room to Run

This article first appeared on GuruFocus.

Broadcom (NASDAQ:AVGO) has a track record of rapid rallies and steep falls, suggesting scope for swift gains and sharp retracements.

Analysts point to three near-term catalysts that could drive another leg higher. First, AI custom silicon demand could double AI revenue toward $40 billion by fiscal 2026, lifting semiconductor solutions sales. Hyperscaler orders have reportedly swelled. Google, Anthropic and OpenAI are named as XPU customers.

Second, software margin improvement at the acquired VMware (VMW) business could expand infrastructure software revenue and operating margins through 2026.

Third, heavier capital returns, faster dividend growth and bigger buybacks, could boost investor returns if free cash flow trends hold.

Risks remain. Customer pushback at VMware, geopolitical limits in China and AI-driven margin pressure could offset gains. Historical drawdowns show the stock can plunge double digits in crises.

Investors should weigh the upside from AI scale against operational and macro risks. The company’s fundamentals, high margins and strong cash conversion, support optimism, but outcomes are likely varied, not guaranteed.

Based on the one year price targets offered by 45 analysts, the average target price for Broadcom Inc is $453.40 with a high estimate of $535.00 and a low estimate of $335.00. The average target implies a upside of +35.95% from the current price of $333.51.Based on GuruFocus estimates, the estimated GF Value for Broadcom Inc in one year is $349.65, suggesting a upside of +4.84% from the current price of $333.51. gf value is gurufocus’ estimate of the fair value that the stock should be traded at. it is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business’ performance. For deeper insights, visit the forecast page.