In Q3, legendary macro investor Stan Druckenmiller sold his entire stake in Broadcom (NASDAQ:AVGO) at an average price of $306.16 per share. Although the semiconductor and software maker has been rising quickly for quite some time on a surge of AI enthusiasm, its stock is off by a little over 7 percent in the last month and has largely plateaued over the last three months.
Why did Stan Druckenmiller sell Broadcom, and does the sale indicate broader weaknesses that could warn other investors off of the stock today?
Unpacking How Druckenmiller Trades Broadcom
A glance at Stan Druckenmiller’s trading history in Broadcom reveals a clear pattern. Druckenmiller has bought AVGO on three separate occasions, with the earliest having been in Q3 of 2023 and the most recent having been in Q2 of 2025. Every time he has bought Broadcom, however, he has sold his entire stake profitably in the very next quarter.
The most recent sale neatly illustrates how quickly entering and exiting AVGO positions has benefited Druckenmiller’s portfolio. The shares sold in Q3 were purchased in Q2 at an average price of $217.16. At the average sale price in the following quarter, Druckenmiller realized a gain of $89 per share or nearly 41 percent on his cost basis.
Given the fact that this is the third time Druckenmiller has repeated this pattern, it seems that he trades Broadcom as a quick turnaround stock that can generate significant profits over short periods of time. Broadcom’s substantial volatility and generally upward momentum due to high levels of growth make it a reasonably good candidate for this kind of strategy. Although the stock is up more than 46 percent over the last 12 months, its 52-week range has taken it from a low of $138.10 to a high of $414.61.
This pattern may also limit the degree to which Druckenmiller’s activity can be interpreted as an indicator of Broadcom’s long-term prospects. Druckenmiller has sold his entire stake twice before this, in both cases at significantly lower prices than he later paid to re-enter the stock. As such, the decision to sell in Q3 likely doesn’t reflect any perceived fundamental weakness on the part of Broadcom as a business.
Druckenmiller’s AI Valuation Skepticism
Though he likely doesn’t think Broadcom itself is performing poorly, some of Druckenmiller’s other recent activity may also provide context for an additional reason behind his AVGO sale. Recently, Druckenmiller has been selling AI pure plays and buying stocks with AI exposure that still have strong businesses without the technology.
Prominent examples include a 27.8 percent increase to his stake in Taiwan Semiconductor Manufacturing in Q2 and the purchase of over 400,000 shares on Amazon in Q3.
This change of mind on pure AI stocks also led to some of Druckenmiller’s most publicized activity this year, namely the decision to sell his entire stakes in NVIDIA and Palantir. Although his history with Broadcom suggests that he prefers to treat it as a stock to buy and sell quickly, this skepticism around highly valued businesses with excessive AI exposure may have contributed to the decision to keep treating Broadcom as a short-term trade instead of a long-term holding.
Is Broadcom a Buy Now?
Although Druckenmiller decided to take his profits in Q3, there could still be quite a lot to like about Broadcom. In fiscal Q4, Broadcom saw its revenues rise 28 percent on a year-over-year basis to $18.02 billion. Net income, meanwhile, totaled $8.52 billion. This illustrates one of Broadcom’s greatest strengths, namely its profitability. In the last 12 reported months, Broadcom has been able to deliver a net margin of 36.2 percent, accompanied by a return on equity of 32.0 percent and an ROIC of 16.6 percent.
More importantly, Broadcom could be in a position to keep delivering strong growth for the foreseeable future. As the leading maker of application-specific integrated circuits for AI, Broadcom will likely benefit considerably from the next generation of AI development. Hyperscalers are increasingly turning to ASIC chips for their advantages over GPUs in task-specific computing, power consumption and overall cost.
Interestingly, this could position Broadcom as a meaningful competitor to NVIDIA in the AI hardware race. Although NVIDIA still commands about 90 percent of the AI chip market, the growing demand for ASIC chips as alternatives to the GPUs NVIDIA specializes in could heavily favor Broadcom.
Many AI hyperscalers are also looking for alternatives to NVIDIA in order to reduce their reliance on a business that, at the moment, has a near-monopoly on AI chips. While other businesses like AMD could offer NVIDIA some competition where GPUs are concerned, Broadcom’s ASICs represent a different approach that could prove very valuable.
When it comes to valuation, Broadcom is a stock that looks expensive but could justify its high price tag. AVGO is still trading at 73.6 times earnings, 26.6 times sales and 63.2 times operating cash flow. Given the rapid growth the business is delivering and its position as a potential long-term competitor to NVIDIA in the AI hardware space, however, Broadcom could have a long and steep growth runway.
The average analyst price forecast for AVGO right now is $456.80, representing a gain of a little over 30 percent from the most recent price of $350.22. With 37 buy ratings, two hold ratings and no sell ratings, Broadcom also maintains a strong buy consensus among analysts. The same positive sentiment appears to be driving institutional buying activity, which has been roughly double institutional selling over the last six months.
Overall, Broadcom could still be a decent buy for investors who are comfortable with some valuation risk and the potential volatility surrounding AI. Although the business will have to keep delivering very high growth rates to justify its steep price tag, Broadcom’s execution so far has been extremely impressive, and its prospects going forward could be quite appealing. If investment in new AI hardware and data centers keeps up as expected, Broadcom could see multiple years of strong growth in its future.
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.