Broadcom Stock Price Forecast – AI and VMware Strength Rallies AVGO

NASDAQ:AVGO Stock Surges on AI Demand and Strong Q3 2025 Earnings

Broadcom Inc. (NASDAQ:AVGO) continues to dominate the semiconductor and infrastructure software landscape, with its share price climbing over 9% to trade near $334, setting a new 52-week high at $356.24. The company now commands a staggering $1.571 trillion market cap, and its financial results confirm that the AI boom is reshaping its valuation and business trajectory. Broadcom reported Q3 2025 revenue of $15.95 billion, beating consensus estimates by $130 million, while EPS reached $1.69, above the $1.66 forecast. Management guided Q4 revenue to $17.4 billion, implying 24% year-on-year growth, as AI chip demand and VMware integration fuel accelerated momentum.

AI Revenue Momentum and Custom Chip Breakthroughs

The most striking driver of NASDAQ:AVGO stock is the surge in artificial intelligence revenue, which rose 63% year over year to $5.2 billion and is expected to reach $6.2 billion in Q4 2025, representing an additional 20% sequential increase. Broadcom disclosed that it has secured more than $10 billion in new orders for custom AI processors (XPUs) from a fourth hyperscale customer, widely believed to be OpenAI, joining its existing relationships with Google, Meta, and Bytedance. This deal expands the company’s backlog of AI-related business to $30–38 billion, ensuring visibility into growth through 2027. Broadcom has established itself as the leader in custom ASIC chips, capturing 70–80% of the market, while competitors such as Marvell struggle to keep pace. Networking chips such as Tomahawk 6 and Jericho4 provide the backbone for scaling massive AI clusters, reinforcing Broadcom’s role as the indispensable infrastructure partner of the AI economy.

VMware Integration Strengthens Software Margins

Broadcom’s strategy is not limited to semiconductors. The acquisition and integration of VMware have transformed its software division into a high-margin growth engine. In Q3, the software segment generated $6.79 billion, up 17% sequentially, with gross margins of 93% and operating margins of 77%. The company’s non-GAAP gross margin reached 78.4%, down only slightly as the AI chip mix grows. Free cash flow margins remain extraordinary at 44%, translating to $22.08 billion in levered FCF, proving that the VMware subscription model is unlocking recurring revenue and expanding profitability. The transition to bundled cloud subscription packages ensures that Broadcom’s software segment can sustain elevated multiples and consistent cash return to shareholders.

Valuation Stretch Versus Peers

At its current levels, NASDAQ:AVGO trades at a 111.7x trailing P/E and 36.9x forward P/E, compared with sector medians in the teens, while its EV/EBITDA ratio of 49.5x and EV/Sales of 26.2x underscore the premium investors are willing to pay for its AI positioning. Analysts expect revenues to reach $80.3 billion in 2026, with EPS growing to $8.80, up from $6.72 in 2025, implying nearly 31% growth year over year. Over the next five years, Broadcom projects revenue climbing toward $150 billion and EPS to surpass $19, putting its stock price trajectory in the $500–600 range if current multiples hold. Wall Street targets are already being revised upward, with Rosenblatt setting $400, Deutsche Bank calling for $350, and Morgan Stanley lifting its estimate to $382.

Institutional and Insider Positioning

Institutional support remains extremely high, with funds holding nearly 80% of float and short interest representing just 1% of shares, signaling conviction in Broadcom’s growth. Insider ownership sits at 2.02%, and filings at AVGO insider transactions confirm that senior executives have not engaged in significant selling despite the stock’s 120% one-year run. This stability among both institutional and insider shareholders reinforces confidence in CEO Hock Tan’s strategy of high-impact acquisitions and relentless operational focus.

Risks from Debt and Market Cyclicality

Broadcom’s balance sheet shows total debt of $40.46 billion, producing a debt-to-equity ratio of 166%. While cash flow covers leverage comfortably, the risk of higher refinancing costs remains. The company is also dependent on a handful of hyperscale customers for the bulk of its AI orders, creating potential concentration risk if budgets shift. Non-AI semiconductor revenue was flat at $4 billion sequentially, reflecting the cyclical nature of legacy chip markets. In addition, reliance on Taiwan Semiconductor (NYSE:TSM) for production exposes Broadcom to geopolitical risks around Taiwan.

Stock Performance and Shareholder Returns

The stock has returned 121% in the past year and nearly 938% over five years, far outperforming the S&P 500’s 89% gain. Year-to-date, AVGO has risen 44.8%, while the S&P 500 added just 10%. Broadcom pays a forward annual dividend of $2.36 per share, yielding 0.77%, with an aggressive payout ratio of 81%. The company has also authorized up to $10 billion in share repurchases through the end of 2025, highlighting its commitment to capital returns even while investing in AI expansion.

Outlook for NASDAQ:AVGO

With guidance set at $17.4 billion for Q4 and AI contracts expanding, Broadcom is cementing itself as the leading alternative to Nvidia in AI infrastructure. VMware integration boosts software margins, while hardware networking ensures Broadcom remains at the center of AI scaling. Valuation is undeniably stretched, but the revenue visibility, execution consistency, and institutional support justify a premium. Based on the data, NASDAQ:AVGO remains a Buy, with near-term resistance at $356 and medium-term potential extending toward $400–430.

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