Broadcom Crushed Earnings and the Stock Fell Anyway. Investors Are Ignoring a $230 Billion Signal.

Broadcom (AVGO) just delivered another exceptional quarter. Revenue rose 86% to $29.6 billion, profit more than tripled, and AI chip revenue climbed 221% from a year ago. Yet the stock still slipped the next day as investors focused primarily on two things. The revenue beat was thin, and the guidance of $34.8 billion for next quarter came in just below the $35 billion Wall Street consensus. For a stock almost priced for perfection, that was enough to knock it lower. But those are quarter-to-quarter numbers, and Broadcom’s case has never rested on a single quarter.

Here’s What the Market Overlooked

The most important part of the report was about the years ahead. CEO Hock Tan said Broadcom has secured the supply to support around $115 billion in AI revenue in fiscal 2027 and roughly $230 billion in fiscal 2028. He added that the company is on track to earn more than $30 per share by 2028. Those are enormous, concrete figures, which should not have been lost behind a rounding-error miss on next quarter’s revenue. 

This is the point I’ve made before. AVGO shouldn’t be judged like a typical AI chip stock. Its value sits in a multi-year pipeline of custom chips being built alongside major customers, including Alphabet's (GOOG) (GOOGL) Google, OpenAI, Meta (META), and Anthropic. A few months ago, Tan said visibility ran to 2028. Now the company has put a number on it. And when I wrote that the Samsung supply deal solved Broadcom’s biggest problem, this is what I meant. Securing enough memory and foundry capacity is what allows Broadcom to turn that demand into actual revenue.

So while the market focused on a marginally soft Q4 guide, Broadcom quietly locked in a path to that $230 billion AI revenue target by 2028. For a company whose value rests on visibility, this report delivered more of it than ever. 

About Broadcom Stock

Broadcom builds semiconductors and enterprise software used across data centers, networks, and corporate IT systems. Its chip business makes custom AI accelerators, networking switches, and connectivity components. Its software business runs largely on VMware and enterprise security tools. Founded in 1961, the company is based in Palo Alto, California, and is led by CEO Hock Tan.

Over the past 12 months, Broadcom’s stock has climbed 16%, marginally underperforming the S&P 500’s ($SPX) 19% gain. Things have gone downhill in the last month, as the stock slipped roughly 15%. The drop came mostly from profit-taking after its big run, along with growing worries that AI spending and valuations have stretched too far.

Broadcom’s valuation is more reasonable than its run would suggest. The forward GAAP price-to-earnings (P/E) of 40.67x sits about 16% below its 5-year average of 48.36x, which is unusual for a company growing this fast. The forward price-to-sales (P/S) ratio of 16.50x tells a different story, sitting 28% above its 5-year average. The premium partly reflects how quickly profit is expanding. The EPS outlook is one of Broadcom’s strongest aspects. Analysts expect growth of 71% in 2026, 66% in 2027, and 57% in 2028, before settling to 23% in 2029. That is rare, sustained growth for a company already worth $1.75 trillion. 

The balance sheet carries more debt than cash, largely due to the VMware acquisition. Broadcom holds roughly $20 billion in cash against $65 billion in debt, leaving it with a net debt of around $45 billion. That is still quite manageable for a company this size that is generating huge free cash flow. Overall, AVGO stock is trading below its historical P/E while guiding to $230 billion in AI revenue by 2028. To me, this suggests the market is still pricing Broadcom with more caution than its numbers justify. 

What Do Analysts Expect for AVGO Stock? 

Following the earnings report, Rosenblatt Securities gave AVGO stock its biggest price target raise, going from $300 to $600 while reiterating a “Buy” rating. Macquarie also turned more bullish, raising its price target from $437 to $490 while upgrading from Neutral to “Outperform.” The firm expects Anthropic to buy more than $40 billion from Broadcom in fiscal 2028, more than offsetting any lost Google business. 

Based on 42 Wall Street analysts, AVGO holds a consensus “Strong Buy” rating with a mean price target of $525.06, indicating a 47% upside. The highest price target is $675, while even the lowest price target of $380 is close to the current share price. 

On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.