AVGO
Broadcom Inc.NasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Aug 26, 2026
What drives AVGO's base case?
base-case thesisThe latest results show unusually rapid growth in AI semiconductors, while infrastructure software continues to add a sizeable recurring revenue stream. The base case takes management’s near-term outlook seriously but does not extend the current pace indefinitely. High profitability is retained because both businesses are producing strong cash flow, though it settles below the latest quarter’s level. Investment remains disciplined but sufficient to support product development and customer demand.
What shapes the assumptions
AI semiconductor revenue
Q2 AI semiconductor revenue was $10.8 billion and grew 1.43 year over year
Raises revenue growth
VMware Cloud Foundation demand
Q2 infrastructure software revenue grew 0.09 year over year
Raises revenue growth
Operating leverage
Q2 GAAP operating income grew 0.85 year over year
Raises operating margin
Free-cash-flow conversion
Q2 free cash flow was 0.462 of revenue
Lowers reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 41.6% a year. Over the last 5 years it grew 24.2% a year — so the price assumes more than it has delivered.
What else could explain it?›
- How confident is this estimate?
- Robustness 49.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
1. Total revenue, fiscal second quarter
Measures Broadcom’s overall quarterly sales momentum across semiconductors and infrastructure software.
$22B
reported2. Semiconductor solutions revenue, fiscal second quarter
Measures the AI chip and networking business that is currently the largest source of incremental sales growth.
$15B
reported3. Infrastructure software revenue, fiscal second quarter
Measures the software revenue base, including VMware Cloud Foundation demand, that helps diversify semiconductor cycles.
$7.2B
reported4. GAAP operating margin, fiscal second quarter
Measures the share of quarterly revenue left after operating expenses and therefore the earnings power used in the DCF.
48.6%
derived5. Free cash flow margin, fiscal second quarter
Measures cash generation after capital expenditures and indicates how much growth can be funded without consuming more capital.
46.3%
derivedBase inputs from financials
source period →Base revenue (TTM)
$75.5B
Diluted shares
4,876,000,000
Net cash
-$45.3B
Bear
low confidence$85.87
IV / share
-76.0% vs $357.16
- Explicit cash flows
- $24.33
- Terminal value
- $70.83
- Net cash
- -$9.29
- Intrinsic value / share
- $85.87
82.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth22.0% → 14.0% → 10.0% → 7.0% → 5.0%medium
How derived: Q2 revenue rose 0.48 year over year and Q3 guidance implied 0.84 growth, but the forecast steps down quickly because semiconductor demand is cyclical and customer deployments can cause large order timing swings.
Why this confidence: near-term company guidance ↑, cyclical AI deployment timing ↓, five-year forecast horizon ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
Evidence for
- Broadcom guided Q3 FY2026 revenue to approximately $29.4 billion, up 0.84 year over year.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Broadcom reports that large semiconductor orders, particularly for AI and wireless products, can be delayed and make quarterly revenue fluctuate significantly.[Broadcom FY2026 Q2 Form 10-Q]· primary
Operating margin42.0%medium
How derived: GAAP operating income was 0.486 of Q2 revenue, but this case allows for lower-margin semiconductor mix and continuing stock compensation rather than assuming the current surge persists.
Why this confidence: reported current profitability ↑, future segment mix uncertainty ↓, stock compensation through 2030 ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- The filing states that semiconductor solutions have a lower gross margin than infrastructure software, and semiconductor mix rose to 0.68 of Q2 revenue from 0.56 a year earlier.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Q2 FY2026 GAAP operating income was $10.788 billion on $22.187 billion of revenue, or 0.486.[Broadcom FY2026 Q2 Form 10-Q]· primary
Tax rate19.0%low
How derived: The current tax provision was unusually low in prior periods and rose with income in FY2026, so this case uses a conservative normalized cash-tax rate below the U.S. statutory rate but above the recent reported effective rate.
Why this confidence: reported tax provision ↑, jurisdictional tax concessions ↓, future tax law uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- The FY2026 Q2 tax provision was $0.820 billion versus $0.120 billion in Q2 FY2025, primarily because income before taxes increased.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Broadcom identifies its ability to maintain tax concessions in certain jurisdictions and potential VMware-related tax liabilities as risks.[Broadcom FY2026 Q2 Form 10-Q]· primary
Reinvestment rate20.0%low
How derived: Q2 free cash flow equaled 0.462 of revenue after only $0.231 billion of capital expenditures, but this case reserves more operating profit for working capital, engineering, capacity support, and growth investment as AI demand matures.
Why this confidence: reported cash conversion ↑, investment accounting is not a direct forecast of reinvestment ↓, future AI supply-chain needs ↓
Measured by
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- Broadcom states that semiconductor demand requires it to estimate customer demand and adjust its manufacturing and supply chain accordingly.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Q2 FY2026 cash from operations was $10.493 billion and capital expenditures were $0.231 billion.[Broadcom Q2 FY2026 results]· primary
Terminal growth2.0%low
How derived: A mature 0.02 long-run rate is below the 0.0425 ten-year Treasury yield and reflects semiconductor cyclicality after the exceptional AI buildout subsides.
Why this confidence: long-run economic constraint ↑, terminal-period duration ↓, cyclical industry exposure ↓
Measured by
Evidence for
- Broadcom says it operates in a highly cyclical semiconductor industry.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Infrastructure software revenue increased 0.09 year over year in Q2 FY2026, providing a recurring software component alongside semiconductors.[Broadcom FY2026 Q2 Form 10-Q]· primary
Base
low confidence$137.30
IV / share
-61.6% vs $357.16
- Explicit cash flows
- $33.83
- Terminal value
- $112.76
- Net cash
- -$9.29
- Intrinsic value / share
- $137.30
82.1% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth30.0% → 20.0% → 14.0% → 10.0% → 7.0%medium
How derived: Q2 revenue grew 0.48 year over year and Q3 guidance called for 0.84 growth, so the base case starts well above normal growth and then tapers as the AI revenue base becomes much larger.
Why this confidence: explicit near-term management guidance ↑, reported AI demand ↑, long forecast horizon ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
Price implies: 41.6% vs our 16.2% — one of several sets that fit this price
Evidence for
- Management said Q2 AI semiconductor revenue was $10.8 billion, up 1.43 year over year, and expected Q3 AI semiconductor revenue of $16.0 billion.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Broadcom says that a relatively small number of customers account for a significant portion of revenue and expects that concentration to continue.[Broadcom FY2026 Q2 Form 10-Q]· primary
Operating margin46.0%medium
How derived: The 0.486 Q2 GAAP operating margin and management’s 0.67 non-GAAP Q3 operating-income guide support durable high profitability, while a modest reduction recognizes mix, compensation, and acquisition-related costs.
Why this confidence: reported GAAP margin ↑, management operating-income guide ↑, non-GAAP to GAAP difference ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- Management guided Q3 FY2026 non-GAAP operating income to approximately 0.67 of revenue.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Total stock-based compensation was $2.092 billion in Q2 FY2026 and Broadcom expects to recognize remaining award cost through FY2030.[Broadcom FY2026 Q2 Form 10-Q]· primary
Tax rate17.0%low
How derived: The FY2026 tax provision increased with income, and the base case assumes a normalized rate above recent effective taxes while retaining some benefit from Broadcom’s multinational operating structure.
Why this confidence: reported provision trend ↑, tax concessions ↓, cross-border tax uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- Broadcom reported a $1.666 billion income-tax provision for the first two fiscal quarters of FY2026.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- The company identifies tax concessions and potential tax liabilities from the VMware acquisition as risks.[Broadcom FY2026 Q2 Form 10-Q]· primary
Reinvestment rate14.0%medium
How derived: The business converted 0.462 of Q2 revenue to free cash flow after capital expenditures, so the base case assumes moderate reinvestment while preserving the asset-light software and fabless semiconductor cash profile.
Why this confidence: reported free-cash-flow margin ↑, asset-light operating model ↑, future investment needs ↓
Measured by
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- Broadcom generated $10.262 billion of Q2 FY2026 free cash flow, equal to 0.462 of revenue.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Broadcom lists research-and-development, capital-expenditure, working-capital, and acquisition needs among its primary uses of liquidity.[Broadcom FY2026 Q2 Form 10-Q]· primary
Terminal growth2.5%low
How derived: A 0.025 perpetual rate assumes Broadcom grows modestly above mature-economy inflation through software and networking content, while staying well below its current AI-driven pace.
Why this confidence: software revenue component ↑, perpetual-horizon uncertainty ↓, semiconductor cyclicality ↓
Measured by
Evidence for
- Infrastructure software revenue was $7.178 billion in Q2 FY2026 and grew 0.09 year over year, supported by VMware Cloud Foundation demand.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Broadcom characterizes the semiconductor industry as highly cyclical.[Broadcom FY2026 Q2 Form 10-Q]· primary
Bull
low confidence$225.21
IV / share
-36.9% vs $357.16
- Explicit cash flows
- $47.46
- Terminal value
- $187.03
- Net cash
- -$9.29
- Intrinsic value / share
- $225.21
83.0% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth40.0% → 29.0% → 21.0% → 15.0% → 10.0%low
How derived: Management expected Q3 revenue growth of 0.84 and AI semiconductor revenue growth above 2.00, so the bull case assumes custom accelerators, AI networking, and VMware adoption keep growth elevated for longer before it tapers.
Why this confidence: explicit AI revenue outlook ↑, custom accelerator demand ↑, sustained high growth assumption ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
Evidence for
- Management expected Q3 FY2026 AI semiconductor revenue of $16.0 billion, more than 2.00 above the prior-year period.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Broadcom warns that it may lose significant customers or face fluctuations in the timing and volume of their demand.[Broadcom Q2 FY2026 results]· primary
Operating margin50.0%low
How derived: The 0.486 Q2 GAAP operating margin, 0.69 gross margin, and guided 0.67 non-GAAP Q3 operating-income margin support a modest sustained improvement if higher-volume AI products retain operating leverage.
Why this confidence: current reported profitability ↑, guided operating leverage ↑, lower-margin semiconductor mix ↓
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- Q2 FY2026 gross margin was 0.69 of revenue, and management guided Q3 non-GAAP operating income to approximately 0.67 of revenue.[Broadcom Q2 FY2026 results]· primary
Evidence against
- The filing says the increasing semiconductor revenue mix has a lower gross margin than infrastructure software.[Broadcom FY2026 Q2 Form 10-Q]· primary
Tax rate15.0%low
How derived: The bull case retains a low but not exceptional normalized tax rate because Broadcom’s recent tax provision relative to pre-tax income was low, while acknowledging the company’s disclosed tax risks.
Why this confidence: recent reported tax outcome ↑, tax concession risk ↓, future tax-law uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- Broadcom reported a $1.666 billion tax provision for the first two quarters of FY2026 despite substantially higher pre-tax income than the prior-year period.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Broadcom identifies maintaining tax concessions and potential VMware-related tax liabilities as risks.[Broadcom FY2026 Q2 Form 10-Q]· primary
Reinvestment rate11.0%low
How derived: The bull case assumes continued exceptional cash conversion because Q2 capital expenditures were only $0.231 billion against $10.493 billion of operating cash flow, allowing growth with limited incremental reinvestment.
Why this confidence: reported cash generation ↑, low reported capital expenditures ↑, investment needs beyond capital expenditures ↓
Measured by
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Evidence for
- Broadcom generated $10.493 billion of operating cash flow in Q2 FY2026 while capital expenditures were $0.231 billion.[Broadcom Q2 FY2026 results]· primary
Evidence against
- Broadcom says its liquidity needs include working capital, research and development, capital expenditures, acquisitions, and investments.[Broadcom FY2026 Q2 Form 10-Q]· primary
Terminal growth3.0%low
How derived: A 0.03 terminal rate assumes Broadcom retains above-average long-run growth from a combined AI networking and infrastructure-software platform, but remains far below the current growth burst.
Why this confidence: two growing business segments ↑, long-run software contribution ↑, perpetual high-growth assumption ↓
Measured by
Evidence for
- Both segments grew in Q2 FY2026: semiconductor solutions by 0.79 and infrastructure software by 0.09 year over year.[Broadcom FY2026 Q2 Form 10-Q]· primary
Evidence against
- Broadcom identifies semiconductor cyclicality and a possible significant reduction in demand from major customers as risks.[Broadcom FY2026 Q2 Form 10-Q]· primary
Valuation robustness
reliability of the estimate, not a stock rating49 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 82% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The tax rate assumption is low-confidence.→ tax rate
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | 47.3% | 1.03 | -4.6% | 4.66B | 9.2% |
| Q1 2025 | 24.7% | 1.24 | 23.6% | 4.84B | 3.6% |
| Q2 2025 | 20.2% | 1.33 | 43.3% | 4.83B | 0.6% |
| Q3 2025 | 22.0% | 1.45 | 40.7% | 4.86B | 4.2% |
| Q1 2026 | 29.5% | 1.64 | 31.8% | 4.89B | 1.1% |
| Q2 2026 | 47.9% | 2.1 | 58.4% | 4.88B | 1.0% |
Valuation history every run
Why intrinsic value changed
Why
Total revenue, fiscal second quarter moved from an unreported prior value to $22.2B, as reported in Broadcom FY2026 Q2 Form 10-Q.
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
Why
Total revenue, fiscal second quarter moved from an unreported prior value to $22.2B, as reported in Broadcom FY2026 Q2 Form 10-Q.
Measured by
- Total revenue, fiscal second quarter$22Breported
- Semiconductor solutions revenue, fiscal second quarter$15Breported
- Infrastructure software revenue, fiscal second quarter$7.2Breported
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
GAAP operating margin, fiscal second quarter moved from an unreported prior value to 48.6%, as reported in Broadcom FY2026 Q2 Form 10-Q.
Measured by
- GAAP operating margin, fiscal second quarter48.6%derived
- Free cash flow margin, fiscal second quarter46.3%derived
Why
Infrastructure software revenue, fiscal second quarter moved from an unreported prior value to $7.2B, as reported in Broadcom FY2026 Q2 Form 10-Q.
Measured by
Sequential deterministic bridge · order-dependent contributions · exactly reconciled
Material event timeline
5/3/2026
GAAP operating margin, fiscal second quarter moved from an unreported prior value to 48.6%, as reported in Broadcom FY2026 Q2 Form 10-Q.
Broadcom FY2026 Q2 Form 10-Q ↗5/3/2026
Total revenue, fiscal second quarter moved from an unreported prior value to $22.2B, as reported in Broadcom FY2026 Q2 Form 10-Q.
Broadcom FY2026 Q2 Form 10-Q ↗5/3/2026
Infrastructure software revenue, fiscal second quarter moved from an unreported prior value to $7.2B, as reported in Broadcom FY2026 Q2 Form 10-Q.
Broadcom FY2026 Q2 Form 10-Q ↗Market inputs researched
The 10-year Treasury par yield on 2026-08-25 was 0.0425 and is used as the U.S.-dollar risk-free proxy.
A 1.10 beta is a rounded semiconductor-industry levered beta proxy, used because business mix spans semiconductors and software rather than relying on an unstable single-vendor quote.
The 0.0433 input uses the published implied U.S. equity risk premium methodology based on index cash yield, expected earnings growth, and long-term bond rates.
The latest available quoted AVGO closing price in the retrieved historical market data was $362.03 on 2026-08-24.
Generated 8/26/2026, 2:02:49 PM · pipeline v1.2.0