Broadcom Inc. (AVGO): A Bull Case Theory

We came across a bullish thesis on Broadcom Inc. on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on AVGO. Broadcom Inc.'s share was trading at $333.24 as of January 28th. AVGO’s trailing and forward P/E were 69.77 and 33.22 respectively according to Yahoo Finance.

Broadcom Inc. designs, develops, and supplies various semiconductor devices and infrastructure software solutions internationally. AVGO continues to demonstrate why it is one of the most strategically essential technology companies today, combining best-in-class semiconductors and enterprise software into a $1.6 trillion infrastructure powerhouse. Its fiscal Q3 results showcased record revenue of $16 billion, up 22% year-over-year, driven primarily by explosive AI-related demand in semiconductors, which grew 26% YoY to $9.2 billion, including $5.2 billion from AI-specific products—a 63% YoY increase.

Broadcom’s networking silicon, including the Tomahawk and Jericho families, underpins hyperscale AI data centers by enabling seamless communication across massive GPU clusters, while its XPU (custom AI accelerator) business, growing to 65% of AI revenue, positions the company as an indispensable partner for hyperscalers such as Google, Meta, Microsoft, Amazon, and OpenAI. This dual model is complemented by a highly profitable enterprise software portfolio, including VMware, CA Technologies, and Symantec Enterprise, generating roughly 46% of revenue with recurring cash flows.

Broadcom reported an operating income of $10.5 billion, EBITDA of $10.7 billion (67.1% margin), and free cash flow of $7 billion, reflecting its exceptional operational leverage and efficiency. CEO Hock Tan’s decision to extend his tenure through 2030 reinforces strategic continuity, highlighting his proven ability to execute transformative acquisitions and integrate them seamlessly, strengthening margins and cash flows.

Looking ahead, Broadcom’s guidance anticipates Q4 revenue of $17.4 billion, driven by continued AI growth, while medium-term projections have been raised significantly, supported by a $10 billion hyperscaler deal. Despite high valuation multiples—51x FY25 earnings and 60x free cash flow—Broadcom’s unparalleled cash generation, structural AI demand, and sticky hyperscaler relationships justify the premium, offering long-term growth and robust shareholder optionality.

Previously, we covered a bullish thesis on Broadcom Inc. (AVGO) by Daan Rijnberk in March 2025, which highlighted Broadcom’s AI-driven growth, VMware-led margin expansion, and strong free cash flow. AVGO’s stock price has appreciated by approximately 70.42% since our coverage as these trends played out and execution remained resilient. Nikhs shares a similar view but emphasizes accelerating AI visibility, the dual-moat model, and hyperscaler partnerships driving long-term strategic advantage.

Broadcom Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 183 hedge fund portfolios held AVGO at the end of the third quarter which was 156 in the previous quarter. While we acknowledge the risk and potential of AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.