Broadcom Inc. AVGO
Broadcom designs chips and business software, and we think the stock is fairly valued today.
Verdict: Hold. Fair value $399 (range $369–$429) against a price of $355 on 3 Oct 2026, 12% above the price. Business quality A (A best, E weakest).
In plain words
What it is: Broadcom designs custom computing chips and sells business software. It serves large cloud providers, corporate technology teams, and phone makers. It charges per chip and sells multi-year software subscriptions.
Profit: The business is very profitable, turning 43% of sales into net profit in the 12 months to August 2026. Profit per share grew 101% over the same period.
The price: Today's price assumes its sales grow about 60.0% a year for 5 years, then slower as in our model. Recently they grew about 35.6% a year. We think one share is worth about $399.27; the price is $355.14.
Our call: Hold, medium confidence: the price is only slightly below our estimate of what the business is worth.
Main risks
- Custom chips may lower profit margins. Selling more custom processors could lower the share of sales kept as profit.
- High reliance on few customers. Losing orders from any of its six big cloud customers would hurt sales.
- Customer anger over software price changes. Clients might switch to rivals if VMware contracts become too expensive.
What to watch
- Next quarterly earnings reported on December 9, 2026.
- Whether total gross margin stays near 69%.
- Changes in total signed contract value, which was $179.20 billion in August 2026.