Broadcom’s 2027 Guidance Valuing It Higher Than Nvidia

Summary:

• Broadcom’s custom silicon market opportunity, particularly in AI XPUs, has excited the market, projecting a $60B-$90B SAM by 2027 from three hyperscalers.
• Adding in two potential additional hyperscalers, and the company can see a SAM approaching $130B.
• But, despite impressive AI growth, Broadcom’s overall valuation compared to Nvidia is questionable due to lower gross margins and non-AI semiconductor business drag.
• The post-earnings rally cleared the chart up, and I can see a path to $275-$285. But after that, sentiment may peak.

Going into Broadcom’s (NASDAQ:AVGO) report, I was concerned the continued news of stagnating growth overall would continue, even if AI maintained growth. However, as we now know, the company provided some insight into its custom silicon market opportunity, and the market took it and ran.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AVGO, NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Join The Top AI And Tech Investing Group

Do two things to further your tech portfolio. First, click the ‘Follow’ button below next to my name. Second, if you want more of this two-fold analysis, step up to being a paid subscriber to my Investor Group Tech Cache with a two-week free trial and read more of this type of analysis on other tech stocks and assets.