Broadcom Inc. (AVGO): A Bull Case Theory

We came crossed a bullish thesis connected Broadcom Inc. connected Nikhs’s Substack. In this article, we volition summarize the bulls’ thesis connected AVGO. Broadcom Inc.'s stock was trading astatine $402.96 arsenic of November 28th. AVGO’s trailing and guardant P/E were 103.32 and 43.10 respectively according to Yahoo Finance.

Broadcom Inc. designs, develops, and supplies assorted semiconductor devices and infrastructure bundle solutions worldwide. AVGO’s latest results uncover a institution transitioning from sustaining maturation to accelerating it, driven by a structural displacement successful AI request and a strengthening bundle currency engine.

AI semiconductors reached $5.2 cardinal successful quarterly revenue, with customized XPUs present 65% of the mix—signaling deep, multi-year co-development partnerships that fastener in hyperscalers. The emergence of a 4th lawsuit with implicit $10 cardinal successful committed AI rack orders, slated for designation successful Q3 FY26, reframes fiscal 2026 arsenic an acceleration twelvemonth alternatively than a continuation of FY25’s 50–60% growth.

This newfound visibility is reinforced by Q4 AI guidance of $6.2 cardinal and management’s assurance successful materially higher maturation adjacent year. Crucially, the VMware acquisition has evolved into a almighty private-cloud utility, generating 77% operating margins and $7 cardinal successful escaped currency flow. With implicit 90% of apical customers present converted to subscriptions, Broadcom is entering Phase 2 of monetization—upselling information and catastrophe betterment into an progressively captive base.

This recurring, high-margin bundle motor funds Broadcom’s assertive AI roadmap, including Tomahawk 6 switches that illness data center networking tiers and Jericho 4 routers that widen coherent AI fabrics crossed 100-kilometer distances.

Despite humble gross-margin unit from higher XPU mix, operating and EBITDA margins stay exceptionally beardown astatine ~65% and ~67%, supported by a $110 cardinal backlog and CEO Hock Tan’s committedness done 2030. Together, these dynamics found Broadcom arsenic a dual-moat business—an AI connectivity person powered by a resilient, expanding bundle franchise—positioning it to capitalize connected the distributed computing epoch that Sun Microsystems erstwhile envisioned but ne'er monetized.

Previously we covered a bullish thesis connected Broadcom Inc. (AVGO) by Daan Rijnberk successful March 2025, which highlighted Broadcom’s AI-driven growth, VMware-led borderline expansion, and beardown escaped currency flow. The company’s banal terms has appreciated astir by 106.07% since our coverage. This is due to the fact that the thesis played out. The thesis inactive stands arsenic execution remains resilient. Nikhs shares a akin presumption but emphasizes accelerating AI visibility and the dual-moat model.