Chip and software maker Broadcom (NASDAQ:AVGO) has been among the best stocks to own over the past couple of years as demand for AI chips has pushed share prices quickly higher. Though AVGO shares are still up more than 55 percent for the year, they have come somewhat down off of their November highs and are now down more than 5 percent in the past week. Is Broadcom on sale now, and can AVGO keep pushing higher going into 2026?
How Broadcom Is Cashing in on AI
While NVIDIA remains the dominant force on the hardware side of AI, where GPUs are concerned, Broadcom has carved out a niche for itself by making custom application-specific integrated circuits. Although GPUs are still the preferred solution for general-purpose AI computing, ASICs are customized chips that are optimized for specific computing tasks. Generally, ASICs offer superior task-specific performance and energy efficiency to their general-use GPU counterparts.
Unsurprisingly, ASIC chips are expected to become an increasingly major part of the AI landscape. As hyperscalers seek alternatives to NVIDIA’s near-monopoly on the GPU market, custom-made chips are likely to see more and more use. Moreover, the relationship between Broadcom’s specialized chips and NVIDIA’s GPUs isn’t a strict either-or choice. Increasingly, experts are expecting a hybrid approach in which GPUs are used for training models that can then be deployed on ASICs to prevail.
So far, Broadcom’s approach has allowed it to attract the interest of several AI majors looking for advantages in computing and options outside of NVIDIA GPUs. A good example is the recently-revealed fact that Anthropic, the business behind the popular Claude AI model, was the previously unnamed customer that agreed to buy $10 billion worth of Broadcom’s chips in the third quarter. Alongside that announcement, management revealed that Anthropic had already ordered a further $11 billion of hardware.
Broadcom’s Winning Streak Not Stopping
To say that Broadcom has been on a winning streak over the past few years would be a significant understatement. With 50 consecutive quarters of revenue growth under its belt, the business has been able to expand its revenues from just $28.5 billion as recently as 2020 to a current trailing 12-month total of $69.3 billion. Revenue growth remained high in Broadcom’s fiscal Q4, which ended on November 2nd. For the quarter, the business reported a 28 percent increase in revenues to $18.0 billion.
Broadcom has also made excellent progress when it comes to profitability, a fact that has contributed to its soaring share prices. In the 2025 fiscal year, net income rose 292 percent to $23.1 billion, resulting in earnings of $4.77 per share. Free cash flow, meanwhile, increased by 39 percent to $26.9 billion.
Even better for investors is the fact that this growth is expected to remain a key feature of Broadcom going forward. Management’s guidance for fiscal Q1 calls for revenue of $19.1 billion, and the 3-5 year compounded EPS growth rate is projected to come in at about 32 percent.
Broadcom has also managed to stay on relatively firm financial ground. Though the business does carry almost $62 billion in debt, this is down significantly from the $66.3 billion reported on its balance sheet at the end of the previous fiscal year. Over the same period, cash and cash equivalents skyrocketed from $9.3 billion to $16.2 billion.
Where Is AVGO Stock Today?
Thanks to its very strong numbers, Broadcom is trading at well north of $300 per share, representing a premium of 71.5 times earnings, 25.9 times sales and 19.9 times book value. As one of the largest beneficiaries of the AI boom, the business has also entered the 12-figure club, commanding an overall market cap of $1.6 trillion.
Even so, many analysts and institutional investors still see considerable upside in AVGO. The consensus price target for the stock currently stands at $454.13, reflecting a potential upside of 33.4 percent. Broadcom also carries an overwhelming buy rating, with 37 of the 39 analysts covering the stock rating it as a buy and just two rating it as a hold. Institutional buying activity has also heavily outweighed selling activity for well over a year, showing strong support for Broadcom from Wall Street.
Is Broadcom Stock on Sale?
With its stock trading at very high multiples to sales and earnings and already sitting on a trailing 12-month return of over 50 percent, it’s difficult to say that Broadcom is undervalued in the traditional sense. AVGO is decidedly priced as a high-growth business with significant earnings expansion already baked in, and a slowdown in growth or a general cooling of the AI market could lead to substantial downward volatility.
With that said, Broadcom does appear to be a stock that could justify and even potentially exceed the expectations that the market has already priced in. With its ASIC chips increasingly being seen as a credible alternative to NVIDIA’s GPUs, Broadcom could have a long runway for growth ahead of it. Moreover, Broadcom is already a high-quality business, having delivered trailing 12-month returns on equity and invested capital of 32.0 percent and 16.6 percent, respectively, while retaining a strong financial footing.
Somewhat unusually for a high-growth tech business, Broadcom could also be a surprisingly strong dividend growth stock. Broadcom has been paying dividends since 2011 and announced its 15th annual dividend increase alongside its fiscal 2025 report. Due to the strong cash flows the business is currently generating, management raised the dividend by 10 percent to an annualized amount of $2.60. Though this gives AVGO a modest yield when compared to its high share price, ongoing cash flow growth and an inclination among management to prioritize dividends could make Broadcom a solid dividend growth stock in the years to come.
At the end of the day, Broadcom may not exactly be on sale, but the business could be an attractive long-term holding for its growing place in the AI hardware market, the growth that will likely be associated with that market position and its strong execution. Even with share prices that are quite high at the moment, Broadcom could prove to be a good buy-and-hold candidate as a play on the next generation of AI hardware.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.