Broadcom Stock Price Forecast: With $110B Backlog and Expanding XPU Demand NASDAQ:AVGO Rides AI Surge

NASDAQ:AVGO Powers Ahead With AI Semiconductor Leadership

Broadcom NASDAQ:AVGO has solidified its position as one of the most powerful players in the AI supercycle, delivering fiscal Q3 revenue of $16.0 billion, up 22% year-over-year, and adjusted EBITDA of $10.7 billion, marking 30% growth. The standout was $5.2 billion in AI semiconductor revenue, a 63% surge from last year, while infrastructure software revenue reached $6.8 billion, up 17%. Management now guides AI semiconductor sales to $6.2 billion in Q4, reflecting 66% YoY growth, with demand led by hyperscalers seeking custom XPUs. The company’s record $110 billion backlog gives visibility deep into fiscal 2026, reinforcing its leadership as enterprise adoption accelerates around Tomahawk 6 and Jericho4 networking chips.

AVGO Expands XPU Customer Base With Multi-Billion Wins

A defining catalyst for NASDAQ:AVGO is its ability to secure hyperscale-level custom silicon contracts. Management confirmed four qualified XPU customers, including one estimated at $10 billion in orders, while industry sources report that OpenAI has moved into production with Broadcom-built XPUs. That decision alone could add another $10 billion to Broadcom’s pipeline, highlighting the shift of AI leaders toward proprietary accelerators. With Google’s TPUs and Amazon’s Graviton offering precedent, Broadcom’s packaging expertise and ASIC leadership are enabling hyperscalers to control costs while scaling AI workloads. The company now expects XPUs to account for 65% of semiconductor AI revenue, up from 50% last year, underscoring the long runway.

VMware Integration Boosts Margins and Recurring Revenue

The VMware acquisition has reshaped AVGO’s financial profile. Q3 software gross margin rose to 93% compared with 90% a year ago, while operating margin reached 77%, up a full 10 percentage points since VMware closed. VMware Cloud Foundation 9.0 is now in rollout across more than 90% of Broadcom’s top 10,000 vSphere accounts, creating high stickiness and new monetization channels. Management guides Q4 software revenue at $6.7 billion, a 15% YoY increase, confirming that the integration is margin-accretive and supporting a blended EBITDA margin forecast of 67%. The shift toward higher recurring revenue offsets margin dilution risks from XPUs, preserving the company’s premium valuation.

NASDAQ:AVGO Financial Power Underpins Buybacks and Dividends

Broadcom’s financial strength is evident in its free cash flow generation. The company posted over $7 billion in FCF during Q3, up nearly 50% year-on-year, taking annualized FCF to $28 billion. That represents a 2% FCF yield at current valuation, but with 20% revenue growth rates, the trajectory supports expansion toward a more justified yield. Shareholder returns remain robust, with consistent dividend increases and a balance sheet capable of funding aggressive buybacks. Insider confidence is reflected in transactions documented on the AVGO insider activity profile, where executives have positioned into post-earnings strength, reinforcing the conviction in future cash generation.

Valuation Stretched But Supported by AI Supercycle

At a trailing P/E of 111x, AVGO trades at decade highs, well above peers like Marvell, IBM, or Oracle. On forward EBITDA, the multiple sits at 31x, a premium pricing in compounding AI demand and hyperscaler CapEx resilience. Risks lie in the non-AI semiconductor business, which posted $4.0 billion in Q3, flat sequentially, and guided at $4.6 billion for Q4. The recovery here is expected to remain slow until FY2026, creating a drag on consolidated growth. However, with hyperscalers continuing to prioritize AI capacity, Broadcom’s unique packaging and ASIC moat are sustaining the bull case. The Street models ~20% annual growth through 2026, suggesting multiple expansion remains tolerable in the context of an AI supercycle.

Technical Setup and Market Outlook for AVGO Stock

AVGO’s real-time chart shows the stock breaking above $340 after earnings, with momentum indicators confirming bullish strength. The stock has rallied double digits post-results, with resistance seen near $350 and support at $300. The consolidation risk comes from profit-taking at stretched multiples, but institutional flows and $110 billion backlog underpin a long-term uptrend. A pullback toward $310 would likely attract buyers, given the visibility of AI-driven revenue acceleration into fiscal 2026 and beyond.

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