Broadcom: Not Paying The $1 Trillion Price Tag

Summary:

• Broadcom’s impressive AI and software market growth is tempered by reliance on a few hyperscale customers, introducing significant concentration risk.
• The company’s AI-driven revenue growth, while strong, faces potential margin pressures from competition and scalability challenges.
• Broadcom’s valuation appears stretched, trading at 28.3x forward earnings, suggesting limited upside and a potential 25-30% overvaluation.
• I recommend reducing exposure to Broadcom, targeting a more balanced risk-reward entry at around $168 per share.

In June this year, I downgraded Broadcom (NASDAQ:AVGO) (NEOE:AVGO:CA) stock to a “Hold”, arguing that optimism has become too stretched. Since then, shares have returned another 35% in cumulative returns for investors, vs. 12% for the S&P 500 (

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Not financial advice.

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