AI Boom Still Has Room for Growth Despite Recent Setbacks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 09 2026
0mins
Source: CNBC
- Optimistic Market Outlook: UBS analyst Andrew Garthwaite noted that the current market resembles early 1999, suggesting that despite bubble signs, low credit spreads and strong profits indicate significant upside potential remains.
- Chip Stock Volatility: Although chip stocks faced severe sell-offs last week, dragging the Nasdaq down over 2%, the S&P 500 and Nasdaq Composite rebounded on Monday due to chip stock gains, demonstrating market resilience.
- Healthy Pullback: Citi analyst Atif Malik views the recent pullback in chip stocks as healthy, maintaining buy ratings on Broadcom, Texas Instruments, and Applied Materials, indicating strong confidence in these companies.
- Uncertain Rate Outlook: While the Federal Reserve began lowering interest rates late last year, rising inflation from increasing energy prices has led to expectations of a potential 25 basis point rate hike in December, adding uncertainty to future economic policies.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 392.900
Low
370.00
Averages
457.75
High
525.00
Current: 392.900
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Broadcom Announces Cash Tender Offer Pricing Terms
- Tender Offer Details: Broadcom has announced a cash tender offer to purchase various maturing bonds with a maximum price of $2.5 billion, including 4.926% and 4.900% senior notes, aimed at optimizing its capital structure and reducing financing costs.
- Acceptance Priority: The acceptance priority of the bonds in the tender offer will influence the final purchase decisions, ensuring the company can prioritize the acquisition of eligible debt instruments, thereby enhancing financial flexibility.
- Deadline Set: The deadline for the tender offer is set for June 17, 2026, at 5 PM; if conditions are not met, Broadcom reserves the right not to accept certain series of bonds, potentially impacting investor decisions.
- Market Reaction Expectations: Broadcom's tender offer may positively affect its debt market, boosting investor confidence and potentially improving the company's financing conditions in the capital markets.
See More
SpaceX IPO Raises Investor Concerns Over Lockup Period
- IPO Fundraising Scale: SpaceX raised $75 billion through its IPO, becoming one of the largest companies in Wall Street history with a valuation of $2.66 trillion, surpassing well-known firms like Amazon and Tesla, showcasing its strong potential in the space economy and AI sectors.
- Index Inclusion Rule Changes: Structural changes in Nasdaq and Russell indexes allow SpaceX to be included in the Nasdaq-100 within just 15 trading days, forcing passive funds to rapidly purchase its stock post-IPO, which is expected to generate tens of billions in demand and further elevate its share price.
- Lockup Period Risks: SpaceX's staggered lockup schedule permits some insiders to sell shares earlier than typical IPO lockup periods, posing significant wealth transfer risks for retail investors, especially amid heightened market enthusiasm.
- Financial Health Concerns: The company's prospectus warns of using debt issuance and share dilution to fund the expansion of AI data center infrastructure and M&A opportunities, combined with its historically high price-to-sales ratio of 142, indicating potential vulnerabilities in profitability and sales growth.
See More
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- Record IPO Financing: SpaceX raised $75 billion through its IPO, becoming one of the largest in history with a valuation of $2.66 trillion, surpassing giants like Amazon and Tesla, highlighting its significant potential in the space economy and AI sectors.
- Index Inclusion Rule Changes: Structural changes in Nasdaq and Russell indexes allow SpaceX to be included in relevant indexes within just 5 to 15 trading days, expected to trigger billions in passive fund buying, further boosting its stock price.
- Lockup Period Arrangement: SpaceX's staggered lockup schedule permits some insiders to cash out shortly after the first quarterly report, potentially exposing retail investors to risks of passive selling that could impact their returns.
- Future Financing Risks: SpaceX plans to utilize debt issuances and share dilution to fund the expansion of its AI data center infrastructure, which may further dilute shareholder equity and increase financial risks for retail investors.
See More
Broadcom's Rapid Growth in the AI Market
- Surge in AI Chip Sales: In fiscal 2025, Broadcom's AI chip sales soared by 65% to $20 billion, accounting for 31% of its total revenue, with projections indicating this could rise to at least $100 billion by fiscal 2027, representing over 58% of revenue, highlighting its robust growth potential in the AI sector.
- Rising Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, enabling them to reduce infrastructure costs by installing more custom ASICs, thereby decreasing long-term dependence on Nvidia and enhancing competitive positioning.
- Diverse Product Portfolio: Broadcom also offers a wide range of non-AI chips across mobile, data center, and networking sectors; while these segments are not growing as rapidly, bundling products can lock in customers and widen its competitive moat across various markets.
- Attractive Investment Value: Analysts forecast Broadcom's revenue and EPS to grow at CAGRs of 53% and 66% from fiscal 2025 to 2028, yet it trades at just 25 times next year's earnings, indicating a compelling investment opportunity relative to its growth rate in the booming AI market.
See More
Broadcom's AI Chip Sales Surge
- Significant Sales Growth: In fiscal 2025, Broadcom's AI chip sales surged 65% to $20 billion, accounting for 31% of total revenue, with projections to reach at least $100 billion by fiscal 2027, representing over 58% of revenue, indicating strong market demand and growth potential.
- Increased Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, reducing infrastructure costs and long-term dependence on Nvidia by installing more custom ASICs, thereby further solidifying their market position.
- Relative Valuation Advantage: Despite the rapid growth of Broadcom's AI chip business, it trades at just 25 times next year's earnings, making it relatively cheap compared to Nvidia's 16 times, attracting long-term investors' attention.
- Diverse Product Portfolio: Broadcom also sells a wide range of non-AI chips and infrastructure software, which, although growing slower, allows the company to bundle products, lock in customers, and expand competitive advantages across multiple markets, enhancing its market moat.
See More
Broadcom's Rise in the AI Market
- AI Chip Sales Surge: Broadcom's AI chip sales soared 65% in fiscal 2025 to $20 billion, accounting for 31% of total revenue, with projections to reach at least $100 billion by fiscal 2027, representing over 58% of revenue, indicating strong growth potential in the AI market.
- Increased Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, reducing infrastructure costs by installing more custom ASICs, thereby decreasing long-term dependence on Nvidia and enhancing competitive positioning.
- Significant Investment Value: Analysts forecast Broadcom's revenue and EPS to grow at CAGRs of 53% and 66% from fiscal 2025 to 2028, respectively, while trading at just 25 times next year's earnings, highlighting its undervaluation relative to growth, making it one of the cheapest mega-cap AI stocks in the market.
- Diverse Product Portfolio: Although Broadcom's non-AI chip business is growing more slowly, its extensive product range across mobile, data center, and networking sectors allows for bundling, locking in customers and widening its competitive moat across multiple markets.
See More
Broadcom Announces Cash Tender Offer Pricing Terms
- Tender Offer Details: Broadcom has announced a cash tender offer to purchase various maturing bonds with a maximum price of $2.5 billion, including 4.926% and 4.900% senior notes, aimed at optimizing its capital structure and reducing financing costs.
- Acceptance Priority: The acceptance priority of the bonds in the tender offer will influence the final purchase decisions, ensuring the company can prioritize the acquisition of eligible debt instruments, thereby enhancing financial flexibility.
- Deadline Set: The deadline for the tender offer is set for June 17, 2026, at 5 PM; if conditions are not met, Broadcom reserves the right not to accept certain series of bonds, potentially impacting investor decisions.
- Market Reaction Expectations: Broadcom's tender offer may positively affect its debt market, boosting investor confidence and potentially improving the company's financing conditions in the capital markets.
See More
SpaceX IPO Raises Investor Concerns Over Lockup Period
- IPO Fundraising Scale: SpaceX raised $75 billion through its IPO, becoming one of the largest companies in Wall Street history with a valuation of $2.66 trillion, surpassing well-known firms like Amazon and Tesla, showcasing its strong potential in the space economy and AI sectors.
- Index Inclusion Rule Changes: Structural changes in Nasdaq and Russell indexes allow SpaceX to be included in the Nasdaq-100 within just 15 trading days, forcing passive funds to rapidly purchase its stock post-IPO, which is expected to generate tens of billions in demand and further elevate its share price.
- Lockup Period Risks: SpaceX's staggered lockup schedule permits some insiders to sell shares earlier than typical IPO lockup periods, posing significant wealth transfer risks for retail investors, especially amid heightened market enthusiasm.
- Financial Health Concerns: The company's prospectus warns of using debt issuance and share dilution to fund the expansion of AI data center infrastructure and M&A opportunities, combined with its historically high price-to-sales ratio of 142, indicating potential vulnerabilities in profitability and sales growth.
See More
SpaceX Raises $75 Billion in Record IPO, Surpassing Major Competitors
- Record IPO Financing: SpaceX raised $75 billion through its IPO, becoming one of the largest in history with a valuation of $2.66 trillion, surpassing giants like Amazon and Tesla, highlighting its significant potential in the space economy and AI sectors.
- Index Inclusion Rule Changes: Structural changes in Nasdaq and Russell indexes allow SpaceX to be included in relevant indexes within just 5 to 15 trading days, expected to trigger billions in passive fund buying, further boosting its stock price.
- Lockup Period Arrangement: SpaceX's staggered lockup schedule permits some insiders to cash out shortly after the first quarterly report, potentially exposing retail investors to risks of passive selling that could impact their returns.
- Future Financing Risks: SpaceX plans to utilize debt issuances and share dilution to fund the expansion of its AI data center infrastructure, which may further dilute shareholder equity and increase financial risks for retail investors.
See More
Broadcom's Rapid Growth in the AI Market
- Surge in AI Chip Sales: In fiscal 2025, Broadcom's AI chip sales soared by 65% to $20 billion, accounting for 31% of its total revenue, with projections indicating this could rise to at least $100 billion by fiscal 2027, representing over 58% of revenue, highlighting its robust growth potential in the AI sector.
- Rising Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, enabling them to reduce infrastructure costs by installing more custom ASICs, thereby decreasing long-term dependence on Nvidia and enhancing competitive positioning.
- Diverse Product Portfolio: Broadcom also offers a wide range of non-AI chips across mobile, data center, and networking sectors; while these segments are not growing as rapidly, bundling products can lock in customers and widen its competitive moat across various markets.
- Attractive Investment Value: Analysts forecast Broadcom's revenue and EPS to grow at CAGRs of 53% and 66% from fiscal 2025 to 2028, yet it trades at just 25 times next year's earnings, indicating a compelling investment opportunity relative to its growth rate in the booming AI market.
See More
Broadcom's AI Chip Sales Surge
- Significant Sales Growth: In fiscal 2025, Broadcom's AI chip sales surged 65% to $20 billion, accounting for 31% of total revenue, with projections to reach at least $100 billion by fiscal 2027, representing over 58% of revenue, indicating strong market demand and growth potential.
- Increased Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, reducing infrastructure costs and long-term dependence on Nvidia by installing more custom ASICs, thereby further solidifying their market position.
- Relative Valuation Advantage: Despite the rapid growth of Broadcom's AI chip business, it trades at just 25 times next year's earnings, making it relatively cheap compared to Nvidia's 16 times, attracting long-term investors' attention.
- Diverse Product Portfolio: Broadcom also sells a wide range of non-AI chips and infrastructure software, which, although growing slower, allows the company to bundle products, lock in customers, and expand competitive advantages across multiple markets, enhancing its market moat.
See More
Broadcom's Rise in the AI Market
- AI Chip Sales Surge: Broadcom's AI chip sales soared 65% in fiscal 2025 to $20 billion, accounting for 31% of total revenue, with projections to reach at least $100 billion by fiscal 2027, representing over 58% of revenue, indicating strong growth potential in the AI market.
- Increased Customer Demand: As the AI market expands, Broadcom's hyperscale customers are expected to ramp up chip purchases, reducing infrastructure costs by installing more custom ASICs, thereby decreasing long-term dependence on Nvidia and enhancing competitive positioning.
- Significant Investment Value: Analysts forecast Broadcom's revenue and EPS to grow at CAGRs of 53% and 66% from fiscal 2025 to 2028, respectively, while trading at just 25 times next year's earnings, highlighting its undervaluation relative to growth, making it one of the cheapest mega-cap AI stocks in the market.
- Diverse Product Portfolio: Although Broadcom's non-AI chip business is growing more slowly, its extensive product range across mobile, data center, and networking sectors allows for bundling, locking in customers and widening its competitive moat across multiple markets.
See More
